A company unexpectedly announces a product recall due to safety concerns about its product. According to the efficient markets hypothesis, this news should
a. raise the price of the company's stock.
b. not affect the price of the company's stock.
c. reduce the price of the company's stock.
d. More information is needed to answer the question.
c
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Explain what is meant by the phrase a bank's "balancing act."
What will be an ideal response?
Which of the following is a major disadvantage of setting the price of a good below equilibrium and using waiting in line rather than price to ration the good?
a. Compared to price rationing, waiting in line is unfair since it is easier for those with higher incomes to wait in line. b. Waiting in line imposes a cost on the consumer; paying higher prices does not. c. Both waiting in line and higher prices are costly to consumers, but unlike the payment of a higher price, waiting in line does not provide suppliers with an incentive to expand future output. d. Waiting in line benefits consumers at the expense of producers.
The banking system currently has $10 billion of reserves, none of which are excess. People hold only deposits and no currency, and the reserve requirement is 10 percent. If the Fed raises the reserve requirement to 12.5 percent and at the same time buys $1 billion worth of bonds, then by how much does the money supply change?
a. It falls by $12 billion. b. It falls by $19 billion. c. It falls by $21 billion. d. None of the above is correct.
Suppose the South had won the Civil War, and trade no longer took place between Northern and Southern states. Explain whether the sum of the North and South GDPs would have been higher or lower than with the current United States.
What will be an ideal response?