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:

Revenue Tariff

A tax imposed on imported goods primarily for generating government revenue rather than protecting domestic industries.

Generate Income

The process of creating revenue or earnings through various sources such as work, investments, or business activities.

Converted

Changed or transformed from one state, form, or function to another.