ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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relatively stable trending upward at a steady pace.
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relatively stable trending downward at a moderate rate.
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extremely volatile (suddenly changed in a short period of time)
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unstable trending downward at a moderate rate.
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Detailed explanation-1: -Stock market volatility increases with financial leverage, as predicted by Black and Christie, although this factor explains only a small part of the variation in stock volatility. In addition, interest rate and corporate bond return volatility are correlated with stock return volatility.
Detailed explanation-2: -Why does the stock market fluctuate? Share prices generally go up and down because of supply and demand. However, they’re also influenced by these factors: Information: When trading in shares, buyers and sellers check the latest news on a company or an industry.
Detailed explanation-3: -Sometimes prices move more quickly than at other times. The speed or degree of the price change (in either direction) is called volatility. As volatility increases, the potential to make more money quickly, also increases. The tradeoff is that higher volatility also means higher risk.
Detailed explanation-4: -If the price of a stock fluctuates rapidly in a short period, hitting new highs and lows, it is said to have high volatility. If the stock price moves higher or lower more slowly, or stays relatively stable, it is said to have low volatility.