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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Definitions:

Non-Representative Sample

A sample that does not accurately reflect the broader population, potentially leading to biased results in research.

Control Group

In experimental research, the group that does not receive the treatment or intervention, serving as a comparison for measuring the effect of the treatment.

Experimenter Bias

The unintentional influence that a researcher can have on the results of a study, due to subjective expectations or desires regarding the outcome.

Self-Report Bias

A form of bias that occurs when respondents do not answer questions accurately due to misunderstanding, embarrassment, or deliberate falsehood.