New Labs Just Announced That It Has Received a Patent

question 49

Multiple Choice

New Labs just announced that it has received a patent for a product that will eliminate all flu viruses.This news is totally unexpected and viewed as a major medical advancement.Which one of the following reactions to this announcement indicates the market for New Labs stock is efficient?

• A)The price of New Labs stock remains unchanged.
• B)The price of New Labs stock increases rapidly and then settles back to its pre-announcement level.
• C)The price of New Labs stock increases rapidly to a higher price and then remains at that price.
• D)All stocks quickly increase in value and then all but New Labs stock fall back to their original values.
• E)The value of all stocks suddenly increase and then level off at their higher values.

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Definitions:

Impulse Frequency Theory

A theory that proposes the frequency of nerve impulses, or action potentials, is related to the intensity of a sensation such as sound or light.

Timbre

The quality of a sound apart from its pitch or loudness; timbre enables us to distinguish a clarinet from an oboe, or one person’s voice from another.

Sound Quality

The measure of how pleasing or accurate an audio output is from any given source.

Pitch

The quality of a sound governed by the rate of vibrations producing it; the degree of highness or lowness of a tone.