In an Efficient Market When a Firm Makes an Announcement

question 21

Multiple Choice

In an efficient market when a firm makes an announcement of a new product or product enhancement with superior technology providing positive NPV,the price of the stock will:

• A) rise gradually over the next few days.
• B) decline gradually over the next few days.
• C) rise on the same day to the new price.
• D) stay at the same price, with no net effect.
• E) drop on the same day to the new pricE.

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Definitions:

Analytic Thinking

The systematic examination of complex ideas, issues, or problems using logical reasoning and critical analysis to break them down into component parts.

Logical Reasoning

The process of using a structured, systematic approach to arrive at conclusions or solve problems based on valid premises.

What-if Questions

Hypothetical queries used to explore potential outcomes or scenarios, often in planning, problem-solving, and decision-making processes.

Play

A form of activity engaged in for enjoyment, relaxation, or educational purposes, often with rules and interactive elements.