US Bancorp Holds a Press Conference to Announce a Positive

question 109

Multiple Choice

U.S. Bancorp holds a press conference to announce a positive news event that was unexpected to the market. As soon as the announcement is made, the stock price increases $8 per share but then over the next hour the price falls resulting in a net increase of only $4. Given this information which of the following statements is correct?

• A) This is an example of a market overreaction.
• B) This is an example of a market underreaction.
• C) This is an example of a semi-strong efficient market.
• D) none of these choices are correct.

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Definitions:

Sale of Goods Act

A legal act regulating the sale of goods, ensuring certain standards like goods being as described, of satisfactory quality, and fit for purpose.

Distance shopping

Refers to the purchasing of goods or services by consumers from a seller without face-to-face interaction, typically through digital means.

Bankruptcy and Insolvency Act

A statute that governs bankruptcy and insolvency proceedings, providing a legal framework for the resolution of financial distress in individuals and corporations.

Unpaid Seller

A vendor who has provided goods or services but has not yet received payment from the buyer.