The rise and fall of share prices have no direct impact on the worth of the underlying company. So why does the success/failure of the company have a direct impact on their share price?
2006-12-08 15:50:58 · 4 answers · asked by dm032 2 in Business & Finance ➔ Corporations
Notice that ratio called P/E...
Price/Earnings.
Basically at that point you're paying for the future stream of income. in addition to the "book" value of the company.
Further if they behave irresponsibly they will either waste the "book" value and/or expose the company to future liability which again reduces the "book" value.
2006-12-08 15:53:00 · answer #1 · answered by feanor 7 · 0⤊ 0⤋
If the buyout is helpful each and all of the present shareholders of Merrill Lynch will acquire $29 in line with share. a in all possibility reason to why the proportion fee did no longer flow as much as $29 a share is using the fact the buyout has yet to be carried out and for that reason there's a undeniable threat that the buyout won't wade with the aid of. The uncertainty of the achievement of buyout is motives why the fee has no longer extra beneficial to $29.
2016-12-30 04:21:04 · answer #2 · answered by ? 3 · 0⤊ 0⤋
Because the price of individual shares are basically determined by the "forecasted" profitabillity of the company itself. If someone thinks the company is going to be making more money, they will pay more for the stock, and vice versa.
2006-12-08 15:53:45 · answer #3 · answered by Dan H 2 · 0⤊ 0⤋
its like the value of a dollar its based on trust if we lost the trust of the world entirly our dollar would be less then a peso overnibght (love you mexico not dissen ya) the same thing applies for stocks there records are publis if thier profits drop or something of that nature it will have a direct result on there share holders who rely on profits to make money get it
2006-12-08 16:02:10 · answer #4 · answered by lola1 3 · 0⤊ 0⤋