"Discounting" an Announcement into a Stock Price Means

question 72

Multiple Choice

"Discounting" an announcement into a stock price means:

• A) The market has expected it an already incorporated it into the stock's price
• B) The announcement affects the future and therefore is given less weight in present terms.
• C) The announcement is less relevant to the stock price than other information regarding the company.
• D) The announcement affects the discount rate and therefore stock valuation in the DDM model.
• E) The announcement reflects the company's unsystemic risk and doesn't affect other stock prices.

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Definitions:

Exchange of Information

The act of giving or receiving data, messages, or communication between parties, essential for effective collaboration and understanding.

Subtle Messages

Indirect or not immediately obvious communications often conveyed through nuances or body language.

Upward Communication

The flow of information from subordinate levels to superior levels in an organization's hierarchy.

Downward Communication

The flow of information from higher levels of an organization's hierarchy to the lower levels, often for directives, updates, or feedback.