In an Efficient Market When a Firm Makes an Announcement

question 27

Multiple Choice

In an efficient market when a firm makes an announcement of a new product or product enhancement with superior technology providing positive NPV the price of the stock will:

• A)stay at the same price, with no net effect.
• B)rise on the same day to the new price.
• C)decline gradually over the next few days.
• D)rise gradually over the next few days.
• E)drop on the same day to the new price.

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Definitions:

Cotton Kingdom

Cotton-producing region, relying predominantly on slave labor, that spanned from North Carolina west to Louisiana and reached as far north as southern Illinois.

New Orleans

A major city in Louisiana, known for its vibrant music scene, distinct Creole cuisine, and as the annual host of Mardi Gras, a colorful and festive carnival.

Elite Planter Class

A social and economic class prominent in the antebellum South, composed of wealthy landowners who held numerous enslaved people to work on large agricultural plantations.

Political Participation

The involvement of individuals in political activities intended to influence government decisions and policies.