Which of the following is a factor that is likely to affect the market price of a stock?

• A. Changes in interest rates
• B. The color of the company's logo
• C. The number of employees' vacation days
• D. The shape of the company's office building

Answer: (A)

Verified step by step guidance

1. Understand that the market price of a stock is influenced by factors that affect the company's profitability, risk, and investor expectations.
2. Recognize that changes in interest rates can affect the cost of borrowing for companies and the attractiveness of stocks compared to other investments, thus influencing stock prices.
3. Identify that non-economic factors such as the color of the company's logo, the number of employees' vacation days, or the shape of the company's office building generally do not impact the stock's market price.
4. Conclude that among the given options, changes in interest rates are the relevant economic factor likely to affect the market price of a stock.
5. Summarize that understanding how macroeconomic variables like interest rates influence stock prices is key to analyzing financial markets in microeconomics.