The market price of a share of common stock is determinedby:
a) the board of directors of thefirm.
b) the stock exchange on which the stock islisted.
c) the president of the company.
d) individuals buying and selling the stock.
The market price of a share of common stock is determined by individuals buying and selling the stock. Therefore, the correct answer is option d) individuals buying and selling the stock.
To further elaborate, the market price of a stock is determined based on the principles of supply and demand. When more people want to buy a stock, the demand increases, and the price usually goes up. Conversely, if more people want to sell the stock, the supply increases, and the price typically goes down.
The board of directors of a company (option a) is responsible for making important decisions for the firm, but they do not directly determine the market price of a stock. Similarly, the president of the company (option c) may influence the company's performance, but they do not have direct control over the stock price.
The stock exchange (option b), such as the New York Stock Exchange or Nasdaq, provides a platform for buyers and sellers to trade stocks. While the stock exchange plays a role in facilitating the trading process, it does not determine the actual market price of a stock. The market price is determined by the forces of supply and demand in the open market.