If Markets Are Strong-Form Efficient,then Event Studies Should Show That

question 12

Multiple Choice

If markets are strong-form efficient,then event studies should show that new information affects a related stock's price

• A)for a single day.
• B)only when the new information relates to a dividend payment.
• C)over a range of days with the overreactions exactly offsetting the underreactions.
• D)only if the information is company specific.
• E)by a very minimal amount,if any.

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Definitions:

General Partners

Individuals in a partnership who share unlimited personal liability for the debts and obligations of the business, and who typically take part in managing the operations of the partnership.

Written Partnership Agreement

A legal document outlining the terms, conditions, and operational aspects of a partnership between two or more individuals or entities.

Limited Partnership

A business arrangement where one or more 'general partners' manage the business and are personally liable for debts, while 'limited partners' contribute capital and share in profits but have limited liability.

Sharing Profits

The distribution of a portion of a company's earnings to stakeholders, such as employees or partners.