On a Particular Day, a Mining Company Reveals That, Due

question 39

Multiple Choice

On a particular day, a mining company reveals that, due to new extraction technology, the extractable yield from several of its mines has risen by 15%. Which of the following is the LEAST likely consequence of such an announcement?

• A) Investors would increase their forecast of future cash flows in that firm.
• B) Investors would revise their estimates of the net present value (NPV) of the firm.
• C) Investors would determine that the estimates of the firm's value on the date prior to the announcement were too high.
• D) The share price would rise due to the pressure to buy.

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