The Food and Drug Administration (FDA) Just Announced Yesterday That

question 1

Multiple Choice

The Food and Drug Administration (FDA) just announced yesterday that they would approve a new cancer-fighting drug from King.You observe that King had an abnormal return of 0% yesterday.This suggests that

• A)the market is not efficient.
• B)King stock will probably rise in value tomorrow.
• C)King stock will probably fall in value tomorrow.
• D)the approval was already anticipated by the market.

---

Definitions:

Market Price

The rate at which a service or asset can presently be bought or sold within a specific market.

Market Economy

A system where the economy and the prices of goods and services are determined entirely by the collective actions of a country's individuals and companies.

Scarce Resources

Resources that are limited in supply and available in less quantity than the demand in an economy, necessitating allocation choices.

Quantities Demanded

The total amount of a good or service that consumers are willing to buy at a given price over a specified period.