Each of the following situations describes an event that affected the stock market price of a particular

Question:

Each of the following situations describes an event that affected the stock market price of a particular company.
a. The price of a common share of McDonnell Douglas, Inc., increased by over $5 per share in the several days after it was announced that Saudia Airlines would order $6 billion of commercial airliners from Boeing and McDonnell Douglas.
b. Citicorp’s price fell by over $3.50 per share shortly after the Federal Reserve
Board increased the by 1⁄4 percent. The is the rate charged to banks for short-term loans they need to meet their reserve requirements.
c. The price of a common share of Ventitex, Inc., a manufacturer of medical devices, fell over
$10 (27.7 percent) after it was announced that representatives of the Federal Drug Administration paid a visit to the company.

Instructions
For each of the independent situations described, explain the likely underlying rationale for the change in market price of the stock.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...