An increase in a firm's stock price most likely indicates which of the following? a. concern that the firm will soon go out of business b. a higher cost of new external funds c. optimism about the firm's profit prospects d. all of the above would increase the price of a firm's stock.

Correct answer is C, Optimism about the firm's profit prospects.

Generally the cost of the stocks of a company determines its business situations. If the company's stocks are higher, the company's financial condition is considered to be strong. So people invest in those stocks in a hope to get profit out of it in the future.

In this situation, if the stock prices get higher, it is due to the optimism about the firm's profit prospects. Public is hoping to get better outcomes.