The Fact That a Company's Stock Price Does Not Change

question 28

Multiple Choice

The fact that a company's stock price does not change when earnings are announced indicates that

• A)earnings were the same (per share)as in the previous quarter.
• B)the securities markets are rational and efficient.
• C)the information contained in the earnings release was fully anticipated by investors.
• D)earnings deviate from investors' expectations.

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Definitions:

Cognitive Labeling

The process by which individuals interpret their emotions based on the context of their situation.

Self-perception

The process through which individuals interpret their own behavior and form attitudes and beliefs about themselves.

Arousal

A physiological and psychological state of being awake or reactive to stimuli.

Self-awareness Theory

A psychological theory suggesting that individuals become more introspective and evaluative of their own behavior when they are made self-aware.