Which of the following about stock prices is true?
A) The buyer of a firm's stock is purchasing a fractional share in the firm's future net revenues.
B) When investors believe that a business decision by the management of a firm will increase the firm's future earnings, the price of the firm's stock will tend to rise.
C) Changing stock prices provide the board of directors and managers of a firm with a strong incentive to make good decisions and undertake productive projects.
D) All of the above are true.

Question

Quizplus · Accepted Answer

All the statements are true: A) Stock represents ownership in a company's future earnings. B) Positive investor sentiment about future earnings typically raises stock prices. C) Stock prices influence management decisions as they reflect company performance and investor confidence.

Which of the Following About Stock Prices Is True