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:

Graphical Display

Visual representations of data, including charts, graphs, and plots, used to convey information clearly and efficiently.

Title

The name of a book, composition, or other artistic work.

Three Dimensions

Describes an object or environment that has width, depth, and height, offering a sense of physical realism.

Axis

A reference line drawn in a graph or chart that defines a scale of measurement for data.