According to the Efficient Markets Hypothesis, Worse-Than-Expected News About a Corporation

question 139

Multiple Choice

According to the efficient markets hypothesis, worse-than-expected news about a corporation will

• A)have no effect on its stock price.
• B)raise the price of the stock.
• C)lower the price of the stock.
• D)change the price of the stock in a random direction.

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Definitions:

Accounting

The systematic process of recording, summarizing, analyzing, and reporting financial transactions of a business or individual.

Investment

The act of allocating resources, usually capital, with the expectation of generating an income or profit.

Net Income

The profit a company generates after deducting all costs, taxes, expenses, and interest from its total revenue, representing the "bottom line" on an income statement.

Trading Portfolio

A collection of securities held by an institution or individual for the purpose of short-term trading to profit from price changes.