Suppose an Efficient Market Has Been Operating with Regard to Stock

question 13

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 was unchanged 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 a 75% gains.
• C)at least potentially consistent with the efficient market hypothesis because investors may have been anticipating a 25% gains.
• D)at least potentially consistent with the efficient market hypothesis because investors may have been anticipating those 50% gains.

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Definitions:

Servings

Specific portions or quantities of food or drink, as determined for a recipe or diet.

Second Car

An additional vehicle owned by an individual or household, typically used as an alternative to the primary car.

Economic Thinking

An approach to analyzing problems that considers the allocation of scarce resources and the trade-offs involved in decisions.

Additional Benefits

Extra advantages or positive outcomes that accompany a primary benefit or result.