BuyFind

Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329
BuyFind

Exploring Economics

8th Edition
Robert L. Sexton
Publisher: SAGE Publications, Inc
ISBN: 9781544336329

Solutions

Chapter 21, Problem 1P
To determine

To explain:

The reasons for firms do not want to issue new shares of stock when consumers or businesses are negative about the economic conditions.

Expert Solution

Explanation of Solution

The share prices are likely to fall when consumers or businesses are pessimistic about economic conditions. So,if there is a situation where consumers or businessmen are pessimistic, the firms should issue a larger number of stocks to raise some funds. Likewise, these firms are apt to spend in new capital or new expenditure when economic conditions are not in support of them.

Economics Concept Introduction

Stock:

The ownership on a company's assets and earnings in form of share is known as stock. The person having share can claim ownership for that part.

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