A Study of the Returns of Firms That Report Unexpectedly

question 12

Multiple Choice

A study of the returns of firms that report unexpectedly high quarterly earnings indicates that

• A) an investor can benefit by purchasing the stock up to 60 days after the announcement.
• B) the market is semi-strong efficient.
• C) the stock's price completely adjusts within one day of the announcement.
• D) an investor must have insider information to profit.

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Definitions:

Merit Pay

Awards pay increases in proportion to performance contributions.

Performance Appraisal System

A performance appraisal system is a structured process through which employees' job performance is regularly evaluated, providing feedback, identifying areas for improvement, and determining development needs.

Totality Quality Management

A management approach centered on quality, based on the participation of all members of an organization and aiming at long-term success through customer satisfaction, and benefits to all members of the organization and to society.

Price Discriminating

A pricing strategy where a company charges different prices for the same product or service to different customers, based on their willingness to pay.