Two Weeks Ago Acme Electronics Announced That It Had Developed

question 69

Multiple Choice

Two weeks ago Acme Electronics announced that it had developed a new chip design, which was being considered by major companies for use in future smart phone development. At the close of trading the day before the announcement, Acme common stock closed at $20. On the day following the announcement, Acme closed at $21. Two days after the announcement the stock closed at $22.50. Four days after the announcement, the stock traded at $23. Last week, Acme stock traded at $26, a level it has maintained since then. This is an example of a(n) :

• A)overreaction and correction.
• B)underpricing.
• C)delayed reaction.
• D)pre-activity action.
• E)efficient market reaction.

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