Question: I have a question about the stock market.I've never understood and always puzzled about something extremely basic andfundamental about how the stock market works.According to my understanding, a firm issues a certain number of shares, and the valueof those shares is determined by supply and demand. However, it appears that I, andanybody else, can purchase or sell any number of shares at the present stock price atany time. So, what is the mechanism that influences the price of a stock?If I check at the stock price of business X and find that it is selling for $100 a share, I, likeanyone else, can pick whether to buy one share for $100 or one million shares for $100.So, what causes the stock price of firm X to rise or fall to $100.01 per share or $99.99 pershare? The stock price does not appear to move up unless all available shares have beenpurchased, nor does it appear to move down unless there are persons prepared to sellshares for less than the market asking price at any particular time.

In stock there are two factors responsible for change in stock performance of company and…

ve never understood and always puzzled about something extremely basic and indamental about how the stock market works. ccording to my understanding, a firm issues a certain number of shares, and the value those shares is determined by supply and demand. However, it appears that I, and nybody else, can purchase or sell any number of shares at the present stock price at ny time. So, what is the mechanism that influences the price of a stock? I check at the stock price of business X and find that it is selling for $100 a share, I, like nyone else, can pick whether to buy one share for $100 or one million shares for $100. o, what causes the stock price of firm X to rise or fall to $100.01 per share or $99.99 per hare? The stock price does not appear to move up unless all available shares have beer urchased, nor does it appear to move down unless there are persons prepared to sell hares for less than the market asking price at any particular time.

ve never understood and always puzzled about something extremely basic and indamental about how the stock market works. ccording to my understanding, a firm issues a certain number of shares, and the value those shares is determined by supply and demand. However, it appears that I, and nybody else, can purchase or sell any number of shares at the present stock price at ny time. So, what is the mechanism that influences the price of a stock? I check at the stock price of business X and find that it is selling for $100 a share, I, like nyone else, can pick whether to buy one share for $100 or one million shares for $100. o, what causes the stock price of firm X to rise or fall to $100.01 per share or $99.99 per hare? The stock price does not appear to move up unless all available shares have beer urchased, nor does it appear to move down unless there are persons prepared to sell hares for less than the market asking price at any particular time.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section9.9: Adjusting The Cost Of Equity For Flotation Costs

Problem 3ST

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