In the United States profits from sales of Grainco's biggest selling product, cornflakes, have dropped by 30 percent over the last 3 years. During this same time the value of a share of Grainco stock rose by over 20 percent. This is puzzling because the value of a stock usually decreases when a company's sales decrease.
Which of the following, if true during the last 3 years, most helps to explain why the value of a share of Grainco stock moved in the way that it did?
(A) Severe drought in the Midwest destroyed a large percentage of the corn crop, forcing Grainco to buy less corn.
(B) Grainco closed a food processing plant in a locality that offered cheap labor and low taxes.
(C) Profits from sales of Grainco oatmeal, which account for a large part of Grainco's total sales and profits, increased dramatically in both the foreign and domestic markets.
(D) Grainco employees formed a union that helped them get higher salaries and increased medical benefits.
(E) Several articles in prominent business publications listed Grainco as a company that has poor management.
Answer: C
Which of the following, if true during the last 3 years, most helps to explain why the value of a share of Grainco stock moved in the way that it did?
(A) Severe drought in the Midwest destroyed a large percentage of the corn crop, forcing Grainco to buy less corn.
(B) Grainco closed a food processing plant in a locality that offered cheap labor and low taxes.
(C) Profits from sales of Grainco oatmeal, which account for a large part of Grainco's total sales and profits, increased dramatically in both the foreign and domestic markets.
(D) Grainco employees formed a union that helped them get higher salaries and increased medical benefits.
(E) Several articles in prominent business publications listed Grainco as a company that has poor management.
Answer: C
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