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Why are equities volatile?
A. Due to low levels of borrowing inuens from indoes
B. Due to changing tax rates equity and bond of
C. Due to the varying supply of and demand for IPOs
D. Due to the residual nature of earnings
Select one!
♦ Relevant knowledge
A solution is composed of a solvent and a solute, solvent. The properties of a solution which depend on the amount of solute particles , and not on the specificity of the solvent are called colligative properties. The four properties that are colligative are freezing-point elevation, boiling-point depression, vapor pressure lowering and Osmotic pressure.
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The correct answer is D. Due to the residual nature of earnings
The return on equity is the dividend. However, the dividend is not obligatory. The company can decide whether to declare dividends or not. So the returns on equities can be unpredictable and high-risk. Because the return on equities is constantly changing, it is so volatile that the price of equities can fluctuate in nature.
Because of the residual nature of earnings