Last Week, Newtown Plastics Announced That It Had Developed a New

question 64

Multiple Choice

Last week, Newtown Plastics announced that it had developed a new plastic container that is stronger and more durable, yet easier to recycle. In response to this announcement, the firm's stock price rose from $21 a share to a high of $27 a share and has remained at that level. This is an example of a(n) :

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

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Definitions:

Uncertainty

The state of being unsure about the future or the outcomes of specific actions or events.

Expected Pay

The anticipated financial return or compensation a person expects to receive from a job, investment, or other economic activity.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Hourly Rate

The amount of money paid for one hour of work.