According to the Efficient Markets Hypothesis,better-Than-Expected News About a Corporation

question 95

Multiple Choice

According to the efficient markets hypothesis,better-than-expected news about a corporation will

• A) have no effect on it's stock price.
• B) raise the price of the stock.
• C) lower the price of the stock.
• D) change the price of the stock in a random direction.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.

Marketable Securities

Financial instruments and assets that are easily convertible into cash, typically with high liquidity and short maturities.

Current Ratio

A financial metric indicating the capacity of a business to meet its obligations due within the next year, determined by dividing its current assets by its current liabilities.

Acid-Test Ratio

The acid-test ratio is a liquidity metric that measures a company's ability to cover its short-term liabilities with its quick assets (excluding inventory).