The Weather Report Says That a Devastating and Unexpected Freeze

question 58

Multiple Choice

The weather report says that a devastating and unexpected freeze is expected to hit Florida tonight, during the peak of the citrus harvest.In an efficient market one would expect the price of Florida Orange's stock to

• A)drop immediately.
• B)remain unchanged.
• C)increase immediately.
• D)gradually decline for the next several weeks.
• E)gradually increase for the next several weeks.

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Definitions:

Common Stockholders

Individuals or entities that own a portion of a corporation's equity and have voting rights based on their share ownership.

Shares Outstanding

The total number of shares of a company's stock that are currently owned by investors, including those held by the public as well as restricted shares owned by the company's insiders and employees.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing corporation, reducing the amount of outstanding stock on the open market.

Cash Dividend

The distribution of some of a company's earnings to its shareholders as determined by the company's board of directors.