Question

The market price of a company’s shares is established by a number of factors. Which one of the following is not one of those factors?

a. an assessment by purchasers of the risk of equality ownership

b. the company’s earnings per share

c. the company’s dividend payments policy

d. the company’s ratio of net income to debt

Answer 1

• The correct answer is Option ‘A’ An Assessment by the purchasers of the risk of equality ownership is NOT one of the factor which affects market price of a company.
• Market Price of a company is affected by the demand for that share in market.

This demand is greatly affected by:

-the fact that how much a share is earnings [Earnings per share]

-the fact that what is the dividend policy of the company, how many times a dividend is paid, what has been a trend.

-the amount of interest paid and amount of debts that restrict the availability of Net Income available for distribution as dividend.