Why Is the Stock Price of a Company an Indication

question 82

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 set-backs,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.

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