To say that a stock price is a signal means that:
A)society can determine the value of a firm.(True Answer )Correct
B)people transfer firm ownership via the signals.
C)lower stock prices imply better value.
D)speculative bubbles can be avoided.

Question

Quizplus · Accepted Answer

A stock price is a signal because it reflects the perceived value of a company by society. It is a way for investors to communicate their beliefs and expectations about the company's future earnings and growth potential. However, stock prices are not a perfect measure of a company's underlying value, and they can be influenced by factors such as market sentiment and speculation.

To Say That a Stock Price Is a Signal Means