What is true regarding how prices of financial securities and commodities tend to behave over the long term?
A) Prices tend to fluctuate, creating market risk.
B) Prices tend to fall consistently over time.
C) Prices tend to rise consistently over time.
D) Prices tend to be highly volatile, demonstrating why markets can be risky.
E) Prices tend to follow supply and demand and trends related to gross domestic product growth rates and corporate earnings.

Question

Quizplus · Accepted Answer

Prices of financial securities and commodities fluctuate over the short term, and these price fluctuations create market risk. However, despite short-term price movements, over the long term, prices tend to follow supply and demand and trends related to gross domestic product growth rates and corporate earnings. It may seem to be an anomaly, but it is easier to predict long-term trends that short-term fluctuations.

What Is True Regarding How Prices of Financial Securities and Commodities