Question

4. Company B's stock price is $500. You overhear a classmate say, "Based on the stock price, Company B's value is clearly higher than Nike's!" Why might your classmate be wrong?

Answer 1

Your classmate may be wrong because the stock price alone doesn't necessarily reflect the value of a company. Other factors, such as the company's size, profits, assets, and liabilities, also need to be taken into account when assessing the value of a company. The stock price is just one piece of information and doesn't necessarily show the whole picture.