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.

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Definitions:

Model Inputs

Model Inputs are data or assumptions used as the basis for calculating or predicting outcomes within a financial or mathematical model.

Critical Variables

Key factors or elements that significantly influence the outcome of a process, model, or system, often monitored for management or prediction.

PEG Ratio

A stock valuation metric that measures the price-to-earnings ratio (P/E) of a stock divided by its earnings growth rate.

Growth Rate

The rate at which an economic variable, such as the Gross Domestic Product (GDP), a company's profits, or an investment's value, increases over a specified period of time.