Question

LO4 - explain trading trends..

4.1 Prepare a business forecast which demonstrates an understanding of trading trends

4.2 Evaluate how changes in the stock market may influence business behaviour

Answer 1

Trading trend is defined as the price movement as per which one should buy the assets. If the price goes up then one should buy an asset. If price goes down then one should sell the asset.

Stock market influences the business behaviour. If the prices of stock increases, it means the investors are confident enough to spend. Increase in stock prices leads to an overall wealth of the people. Thus people will spend more thus the businesses selling goods and services will earn more.

If the prices of the stock decreases, then the businesses will feel under confident. Decrease in the prices of stocks will lead to a decreae in the wealth of the people. Thus they will buy less goods and use less services. This will lead to a decrease in the profit of goods and services as the consumers will buy less goods and services.