Fundamental Analysis Shows That Quadrangle Company Is Fairly Valued

question 127

Multiple Choice

Fundamental analysis shows that Quadrangle Company is fairly valued. Then Quadrangle Company unexpectedly improves its production techniques and unexpectedly hires a new CEO away from another very successful competitor. Suppose this has no effect on the price of the stock of Quadrangle Company.

• A)Fundamental analysis would now show the corporation is overvalued.The fact that the price was unchanged is consistent with the efficient markets hypothesis.
• B)Fundamental analysis would now show the corporation is overvalued.The fact that the price was unchanged is not consistent with the efficient markets hypothesis.
• C)Fundamental analysis would now show the corporation is undervalued.The fact that the price was unchanged is consistent with the efficient markets hypothesis.
• D)Fundamental analysis would now show the corporation is undervalued.The fact that the price was unchanged is not consistent with the efficient markets hypothesis.

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Definitions:

Mechanistic

Relating to a view of organizations that emphasizes structure, hierarchy, and a clear division of labor.

Independent Companies

Businesses that operate independently, without the control or influence from larger corporate chains or conglomerates.

Share Skills

The practice of exchanging knowledge or competencies among individuals or groups to enhance collective proficiency.

Decision-Making Power

The authority to make decisions, often held by leaders or groups in an organization, affecting the direction and practices of the entity.