Final answer:
When a firm invests in a positive NPV project (with return on investment exceeding the discount rate), the stock price generally rises.
Step-by-step explanation:
When a firm invests in a positive NPV project, it indicates that the return on investment exceeds the discount rate. This means that the project is expected to generate more value than it costs to undertake. When such a project is announced, it often signals the firm's positive prospects, leading to increased investor confidence and demand for the firm's stock. As a result, the stock price usually rises in response to the announcement of a positive NPV project.