Question

Relation between stock price index and economic health of nation​

Answer 1

Answer:

Studies suggesting a negative relationship between stock prices and inflation (Fama, 1981) envisage that high inflation predicts an economic downturn and keeping in view this the firms start selling off their stock. An increase in the supply of stock then reduces the stock prices.

Explanation:

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Answer 2

Explanation:

Studies suggesting a negative relationship between stock prices and inflation (Fama, 1981) envisage that high inflation predicts an economic downturn and keeping in view this the firms start selling off their stock. An increase in the supply of stock then reduces the stock prices.