Identify the internal factor that influences the stock prices of a firm.
A) Legal constraints
B) Capital structure
C) Tax laws
D) General level of economic activity
E) Conditions in the stock market

Question

Quizplus · Accepted Answer

Capital structure, or the way a company finances its operations through debt and equity, can directly affect the stock price. For example, if a company takes on too much debt, investors may become worried about the company's ability to make future payments and the stock price may fall. Similarly, if a company issues too many shares of stock, the value of each individual share may decrease, again impacting the stock price.

Identify the Internal Factor That Influences the Stock Prices of a Firm