Nicholas Manufacturing Just Announced Yesterday That Its Fourth Quarter Earnings

question 46

Multiple Choice

Nicholas Manufacturing just announced yesterday that its fourth quarter earnings will be 10% higher than last year's fourth quarter.You observe that Nicholas had an abnormal return of -1.2% yesterday.This suggests that

• A)the market is not efficient.
• B)Nicholas' stock will probably rise in value tomorrow.
• C)investors expected the earnings increase to be larger than what was actually announced.
• D)investors expected the earnings increase to be smaller than what was actually announced.
• E)earnings are expected to decrease next quarter.

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