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question 77

Essay

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In a surprise announcement,NASA released details of a major contract with Lockheed-Martin (LMT)that would increase LMT's market value by $7.5 billion.It was widely expected by the market that this contract would be awarded to LMT's major competitor Boeing (BA).Assume that Boeing has 800 million shares outstanding and Lockheed Martin has 425 million shares outstanding.Prior to this announcement,the market felt that the probability of Boeing winning the contract was 90% and that Lockheed-Martin's chance was only about 10%.
-What do you anticipate will happen to Lockheed-Martin and Boeing's stock prices are a result of this surprise announcement?

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Definitions:

Internet

A vast network of computers connected globally, allowing them to communicate and share information across long distances instantly.

Natural Monopoly

A market condition where a single firm can supply a product or service at a lower cost than any potential competitor, often due to economies of scale.

Marginal Cost

The outlay for making one more unit of a product or service.