Why Is the Share Price of a Company an Indication

question 49

Multiple Choice

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

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

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