Which of the Following About Stock Prices Is True

question 241

Multiple Choice

Which of the following about stock prices is true?

• A) The buyer of a firm's stock is purchasing a fractional share in the firm's future net revenues.
• B) When investors believe that a business decision by the management of a firm will increase the firm's future earnings, the price of the firm's stock will tend to rise.
• C) Changing stock prices provide the board of directors and managers of a firm with a strong incentive to make good decisions and undertake productive projects.
• D) All of the above are true.

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Definitions:

Lower-order Needs

Basic human necessities such as physiological and safety needs, according to Maslow’s hierarchy.

Psychological Development

The growth and change in an individual's mental functions and behaviors throughout their lifespan.

Hierarchy of Needs Theory

A psychological theory proposed by Abraham Maslow that categorizes human needs into a five-level pyramid, with physiological needs at the bottom and self-actualization at the top.

Process Theories

Theories that focus on understanding how processes occur over time, explaining the sequence of steps that lead to particular outcomes.