Post-Earnings Announcement 'Drift' Is

question 23

Multiple Choice

Post-earnings announcement 'drift' is:

• A) Consistent with the strong-form efficient markets hypothesis
• B) Consistent with the semi-strong-form efficient markets hypothesis
• C) The predictability of returns following earnings announcements
• D) The predictability of abnormal returns following earnings announcements

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Definitions:

Monopolistic Competitors

Firms that have many competitors but distinguish themselves through product differentiation, allowing them some control over their prices.

Average Total Cost Curves

A graphical representation showing the average cost per unit of output at different levels of production.

Monopolistic Competitor

A firm operating in a market with many competitors but differentiating its product or services from others, thus having some degree of market power.

Price Discrimination

A strategy where a company sells the same product at different prices to different customers, not based on costs but typically on willingness or ability to pay.