Suppose an Efficient Market Has Been Operating with Regard to Stock

question 35

Multiple Choice

Suppose an efficient market has been operating with regard to stock in a particular company and that company announces that its profits were up 50% from the previous period but the stock price falls after getting the news on a day when all of the other stocks are barely moving. This is

• A)absolutely illogical.
• B)at least potentially consistent with the efficient market hypothesis because investors may have been anticipating 75% gains.
• C)at least potentially consistent with the efficient market hypothesis because investors may have been anticipating 25% gains.
• D)at least potentially consistent with the efficient market hypothesis because investors may have been anticipating those 50% gains.