Other things being constant, when a firm sells new shares of stock, the
A)supply of the stock increases and the price decreases.
B)supply of the stock decreases and the price increases.
C)demand for the stock increases and the price increases.
D)demand for the stock decreases and the price decreases.

Question

Quizplus · Accepted Answer

When a firm sells new shares of stock, it increases the supply of the stock in the market. According to the law of supply and demand, an increase in supply, with demand remaining constant, typically leads to a decrease in price.

Other Things Being Constant, When a Firm Sells New Shares