Which one of the following statements is correct?
A) Stock prices are independent of the economic cycle.
B) Stock prices change simultaneously with the economy.
C) Stock prices often start to rise before the end of a recession.
D) Changes in stock prices generally lag changes in the economy.

Question

Quizplus · Accepted Answer

Stock prices often start to rise before the end of a recession because investors anticipate the recovery and start buying stocks in anticipation of future growth, leading to an increase in stock prices even before the actual economic indicators show improvement.

Which One of the Following Statements Is Correct