Fundamental Analysis Shows That Quadrangle Company Is Fairly Valued

question 127

Multiple Choice

Fundamental analysis shows that Quadrangle Company is fairly valued. Then Quadrangle Company unexpectedly improves its production techniques and unexpectedly hires a new CEO away from another very successful competitor. Suppose this has no effect on the price of the stock of Quadrangle Company.

• A)Fundamental analysis would now show the corporation is overvalued.The fact that the price was unchanged is consistent with the efficient markets hypothesis.
• B)Fundamental analysis would now show the corporation is overvalued.The fact that the price was unchanged is not consistent with the efficient markets hypothesis.
• C)Fundamental analysis would now show the corporation is undervalued.The fact that the price was unchanged is consistent with the efficient markets hypothesis.
• D)Fundamental analysis would now show the corporation is undervalued.The fact that the price was unchanged is not consistent with the efficient markets hypothesis.

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Definitions:

Opinion Leader

An individual or organization that has the ability to influence the attitudes or behaviors of others, typically within a specific community or market segment.

Influencer

An influencer is an individual who has the power to affect purchase decisions of others because of their authority, knowledge, position, or relationship with their audience.

Spouse-dominant Decision Making

A decision-making process within families where one spouse predominantly influences the buying decisions over the other.

Purchase Decisions

The process consumers go through when selecting, purchasing, and using products or services.