Why Is the Stock Price of a Company an Indication

Multiple Choice

Why is the stock price of a company an indication of the performance of the 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 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.