Why are a stock’s 52-week high and low significant?

Why are a stock’s 52-week high and low significant?

• A. They show the total volume traded over the year.
• B. They indicate potential price volatility over the past year.
• C. They affect the interest rates on stock loans.
• D. They are used to calculate stock dividends.

Answer: (B)

A stock’s 52-week high and low are significant because they indicate potential price volatility over the past year. This range provides investors with insight into how much the stock price has fluctuated, which can be an important indicator of the stock's stability or lack thereof. Knowing the extremes can help traders and investors gauge market sentiment and potential future price movements. The 52-week high represents the highest price at which the stock has traded in the last year, while the 52-week low shows the lowest price. A narrow range between these two points can imply a less volatile stock, while a wide range can suggest higher volatility, meaning that the stock has experienced greater price swings over the past year. This information is crucial for making informed trading strategies, investment decisions, and risk assessments. In contrast, factors such as total volume traded, interest rates on stock loans, or stock dividends are not directly related to the implications of a stock’s price movement over time as represented by its 52-week high and low.

A stock’s 52-week high and low are significant because they indicate potential price volatility over the past year. This range provides investors with insight into how much the stock price has fluctuated, which can be an important indicator of the stock's stability or lack thereof. Knowing the extremes can help traders and investors gauge market sentiment and potential future price movements.

The 52-week high represents the highest price at which the stock has traded in the last year, while the 52-week low shows the lowest price. A narrow range between these two points can imply a less volatile stock, while a wide range can suggest higher volatility, meaning that the stock has experienced greater price swings over the past year. This information is crucial for making informed trading strategies, investment decisions, and risk assessments.

In contrast, factors such as total volume traded, interest rates on stock loans, or stock dividends are not directly related to the implications of a stock’s price movement over time as represented by its 52-week high and low.