If the Markets Are Semistrong Efficient, and a Firm Is

question 38

Multiple Choice

If the markets are semistrong efficient, and a firm is known to have been having financial difficulties for the last six months, what effect would you expect an announcement by the firm
That it will cut dividends have on the day that the announcement is made, all else equal?

• A)a significant decrease in price since investors will not be getting as much in cash payments
• B)little to no effect on the price since the cut has probably been anticipated by the markets
• C)a significant increase in the price of a competitor firm that has not had to cut its dividends
• D)a moderate increase in price since investors will consider this a step in the right direction

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Definitions:

Violent Crime

Acts of crime that involve force or the threat of force against others, including assault, robbery, and homicide.

Immigrant Succession

The process through which immigrants and their descendants achieve social, economic, and cultural integration and success in their new country.

Organized Crime

Criminal activities carried out by structured groups engaged in illegal enterprises, such as trafficking, corruption, or extortion.

Prohibition

The legal act of forbidding something, typically referring to the historical ban on alcohol in the US.