Running head: RISK AND RETURN1Risk and ReturnInstitution AffiliationInstructors NameStudents NameCouse CodeDateRISK AND RETURN2RISK AND RETURNDetermine whether stock prices are affected more by long-term or short-term performanceMany factors affect stock prices. However, they are affected more by the long-term overthe short-term performances. This is the case as while the firms struggles to increase their longterm cash flow then they end up affecting the prices of their stocks. The company does notentirely concentrate on the long-term goal, but it also puts much concern on the quarterlychanges of their earnings. In most case, the short terms happened to be very alternating topositive and negative. Therefore, the investors in most cases take the long-term trends to enablehem in making the wise decision of whether to invest or not. Several things happen in the shortterm like economy changes, mergers, new regulation and others the long term comes in tocorrect all the imperfection s while giving the investors the confidence in a better future. Anexample is a company that considers discontinuing one of its segment following financialconstraints and see that ...
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