Comprehensionmedium · Past Paper
The company's stock price dropped by 20% after the news of the scandal broke. What is the cause?
APeople are buying more stock.
BInvestors have lost confidence in the company.
CThe company is making too much profit.
DThe stock market is closed.
✓ Correct Answer: B — Investors have lost confidence in the company.
Negative news or scandals lead to a loss of trust, causing investors to sell and prices to fall.
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