The CEO decided to expand into a new market in 2004. At the end of 2004 the stoc

Question

The CEO decided to expand into a new market in 2004. At the end of 2004 the 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 stockprice.

c. The CEO's decision may have been optiman, keeping the stock price from falling more than 5%.

d. CEO decisions are irrelevant because the efficient market determines the value of a company's stock.

Explanation / Answer

b. The CEO made a poor decision to expand because the company's profits for the year obviously decreased, causing the drop in stockprice.

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