Why Is the Stock Price of a Company an Indication

question 61

Multiple Choice

Why is the stock price of a company an indication of the performance of that company's senior managers?

• A)Well-run companies are invariably highly profitable,which leads to a higher share price.
• B)In general,people want to invest in a well-managed corporation,which will drive up the price of shares.
• C)Investors who can see that a company is well-run will hold on to their shares,even if the company faces temporary setbacks,since they know that the stock price will likely rise again.
• D)Larger companies tend to be better run and so have higher stock prices.
• E)Managers who perform well get paid well,and can afford to buy more shares of their own company,driving up the share price.

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Definitions:

Adolescent

A young person in the transitional stage of physical and psychological development that generally occurs during the period from puberty to legal adulthood.

Elementary Schoolchild

A child who attends elementary or primary school, typically in the age range of five to eleven years, focusing on foundational academic, social, and emotional skills.

Preschooler

A child typically between the ages of three and five years old who is in the developmental stage preceding formal schooling.

Adolescent

A person in the developmental stage of adolescence, typically between the onset of puberty and legal adulthood, characterized by significant physical, psychological, and social changes.