Why Do Shares Change Price?

The video tutorial explains the dynamics of stock markets, focusing on how traders buy shares hoping for profit, despite the risks due to unpredictable share prices. It discusses factors affecting share value, including tangible elements like company revenue and intangible ones like reputation. The case of Lehman Brothers illustrates the risks involved, showing how even reputable companies can fail, leading to significant financial losses for shareholders.

What are the two main factors that influence the value of shares?

• Cash flows and people's perceptions

• Company size and market trends

• Government policies and interest rates

• Economic growth and inflation

How can a company's reputation impact its share prices?

• It can result in higher tax rates

• It can lead to increased government regulation

• It can cause a decrease in production costs

• It can attract more investors, boosting share value

What was the initial reaction of shareholders when Lehman Brothers announced an overestimation of their assets?

• They remained confident in the company's recovery

• They filed a lawsuit against the company

• They immediately sold all their shares

• They demanded a change in management

What major event occurred in 2008 that affected Lehman Brothers?

• A massive financial loss

• An expansion into new markets

• A merger with another bank

• A significant profit increase

What lesson can be learned from the Lehman Brothers case?

• Even reputable companies can face financial collapse

• Share prices are unaffected by market perceptions

• Investing in reputable companies is always safe

• Government bailouts are guaranteed for large banks