The CEO of JLI Corp.decided to expand into a new market in 2010.At the end of 2010,JLI's stock price had decreased 5% since the beginning of the year.Which of the following statements is most correct?
A) The CEO made a poor decision to expand because the stock price decreased during the year.
B) The CEO made a poor decision to expand because the company's profits for the year obviously decreased, causing the drop in stock price.
C) The CEO's decision may have been optimal, keeping the stock price from falling more than 5% for the year.
D) CEO decisions are irrelevant because the efficient market determines the value of a company's stock.

Question

Quizplus · Accepted Answer

The CEO's decision may have been optimal because it's possible that without the expansion, JLI's stock price would have fallen more than 5%. Additionally, it's important to note that stock prices can be influenced by many factors beyond just company profits or CEO decisions, such as overall market trends and investor sentiment. Therefore options A and B are not correct, and option D is too extreme in its assertion that CEO decisions are irrelevant.