Which of the Following Is $\underline{not}$ A Possible Cause of Post-Earnings-Announcement Drift?
A)Financial Analysts Over-React to Post-Earnings-Announcement

question 16

Multiple Choice

Which of the following is $\underline{not}$ a possible cause of post-earnings-announcement drift?

• A)Financial analysts over-react to fundamental signals stemming from securities.
• B)Shareholders do not distinguish well between the cash flow portions and the accrual portions of earnings.
• C)Financial analysts' forecast errors lead to incomplete security price adjustments.
• D)Transaction costs are too high relative to the potential gain that can be earned from the mispricing of the securities.

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Definitions:

Outstanding

Describes something that is currently due or has not been settled or resolved, often referring to payments or checks.

Treasury Stock

Shares once issued and then retrieved by the originating company, lowering the volume of shares trading on the open market.

Par Value

A nominal or face value given to a share of stock or a bond, often used in accounting to determine legal capital or in the issuance of shares.

Common Stock

Type of equity security that represents ownership in a corporation, with rights to vote on corporate matters and receive dividends.