What Causes Changes of the Price of a Stock - 275 Words

What Causes Changes of the Price of a Stock (Other (Not Listed) Sample) Content: What Causes Changes of the Price of a StockStock prices for firms trading in the stock market keep on changing on a daily basis, at times fluctuating by minute margins. But what causes these prices to change and fluctuate all the time? I will seek to provide an answer to this question using reasonable and valid argument.The stock prices change on a daily basis due to market forces, i.e. share prices change as a result of demand and supply.In the case where many people in the market want (demand) a particular stock rather than sell (supply) it, then the price of the stock in question will go up as. The same is true for the reverse, i.e. when a stock is not inn high demand in the stock market, theprice of the particular stock in question will drop.The supply and demand of a particular stock is influenced by a number of factors. One very important factor is the earning of the companys stock. When a company generates high revenues and profits, it translates to higher divi dends for the shareholders,the stock will therefore be in high demand in the market. When a company registers loss or minimal profit margins on investments, then few people would like to buy the stock as it will generate little to no dividends.However, earnings cannot and is not the only aspect that influences the price of a stock. There are hundreds of variables, indicators and ratios that have been developed to determine the price of a stock. Some of which include, moving average convergence, Chaikin Oscillator and price/earnings ratio.Inflation can cause the price of a stock to change. Inflation means the average prices of commodities in the market has gone up. Thus, consumers are spending more on commodities and services, increasing revenues for companies and in turn increasin...