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:

Quotas

are set limits or targets that need to be achieved within a specified timeframe, commonly used in sales, production, and policy implementation.

Political Risk Analysis

The process of assessing and evaluating the potential risks involved in a business's operations due to political decisions, conditions, or events.

Political Disruptions

are events or actions that cause significant changes or interruptions to the usual political activities and processes, potentially leading to instability.

Common Currency

A currency that is used by multiple countries, facilitating international trade and economic stability, like the Euro in the European Union.