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.

---

Definitions:

Consumerism

The protection or promotion of the interests of consumers, advocating for their rights to information, safety, and to be heard, often in opposition to unethical practices by businesses.

Economic Structure

The organization and functioning of an economy, including the distribution and production of goods and services.

Means of Production

The physical and non-physical inputs used in the production of goods and services, such as land, labor, and capital.

MNC Practices

Strategies and operational procedures used by multinational corporations to conduct business across international borders.