During a financial crisis the possibility of bank failures rises.An increase in the likelihood of a bank failing shifts demand for its stock
A)right,so the price rises.
B)right,so the price falls.
C)left,so the price rises.
D)left,so the price falls.

Question

Quizplus · Accepted Answer

When there is a higher likelihood of a bank failing, investors become more cautious and demand for the bank's stock decreases as they perceive it to be riskier. This results in a left shift of the demand curve, leading to a decrease in stock price.

During a Financial Crisis the Possibility of Bank Failures Rises