LJP Corporation Just Announced Yesterday That It Would Undertake an International

question 43

Multiple Choice

LJP Corporation just announced yesterday that it would undertake an international joint venture. You observe that LJP had an abnormal return of 3% yesterday. This suggests that

• A) the market is not efficient.
• B) LJP stock will probably rise in value again tomorrow.
• C) investors view the international joint venture as bad news.
• D) investors view the international joint venture as good news.
• E) earnings are expected to decrease next quarter.

Realize the importance of knowledge management and intellectual capital in leveraging organizational performance.

Understand and calculate the payback period for investment projects.

Identify and evaluate the profitability index and internal rate of return as investment appraisal methods.

Analyze the implications of ignoring salvage value in capital budgeting decisions.