If the Price of a Company's Stock Truly Reflects the Value

question 57

Multiple Choice

If the price of a company's stock truly reflects the value of a share in the company, then

• A)it is impossible for the stock price to change by 20% in a single day, as in 1987.
• B)it is impossible for the stock price to increase by 84% within a single year, as in 1999.
• C)stock prices can only change abruptly when accounting scandals are uncovered, as in 2002.
• D)abrupt stock price changes reflect abrupt changes in the public's perception of fundamentals and risk.

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Definitions:

Membrane Potential

The voltage difference across a cell's plasma membrane due to the differential distribution of ions.

Hyperpolarized

Hyperpolarized refers to a state where a cell's membrane potential is more negative than its normal resting potential, often making the cell less active.

Stimulus Strength

The magnitude or intensity of a stimulus that influences the degree of response of a biological system.

Action Potential

A temporary reversal of an electrically polarized state in a nerve fiber that travels down the fiber to transmit a nerve impulse.