Nicholas Manufacturing Just Announced Yesterday That Its 4^th-Quarter Earnings Will

question 1

Multiple Choice

Nicholas Manufacturing just announced yesterday that its 4^th-quarter earnings will be 10% higher than last year's 4^th quarter.You observe that Nicholas had an abnormal return of -1.2% yesterday.This suggests that

• A) the market is not efficient.
• B) Nicholas' stock will probably rise in value tomorrow.
• C) investors expected the earnings increase to be larger than what was actually announced.
• D) investors expected the earnings increase to be smaller than what was actually announced.
• E) earnings are expected to decrease next quarter.

---

Definitions:

Predict

To forecast or estimate the outcome of a particular process or reaction based on known data or theories.

Nitroglycerine

A highly volatile and explosive chemical compound used in dynamite and in medicinal preparations as a vasodilator.

Glycerine

A simple polyol compound used in foods, pharmaceuticals, and cosmetics for its moisturizing and solvent properties.

Nitric Acid

A highly corrosive and strong mineral acid with the formula HNO3, commonly used in the production of fertilizers, explosives, and in various nitration processes.