Why Do Corporations Want to Keep the Price of Their

question 151

Multiple Choice

Why do corporations want to keep the price of their stock high?

• A)A higher stock price increases the funds the firm can raise when it sells a given amount of stock.
• B)Corporations can pay their managers lower salaries and avoid principal-agent problems when stock prices are higher.
• C)Higher stock prices are correlated with lower expected profitability.
• D)All of the above provide incentive for corporations to keep the price of their stock high.

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Definitions:

Creativity

The ability to generate innovative ideas and solutions by thinking outside the conventional boundaries.

Innovation

The process of introducing new ideas, devices, or methods to improve goods, services, or processes.

Creative Process

A series of steps or stages that an individual goes through during the act of creation, which typically include preparation, incubation, illumination, and verification.

Complex Phenomenon

A situation or event that is intricate due to having multiple interconnected factors or elements.