Suppose an efficient market has been operating with regard to stock in a particular company, and that company announces that its profits were up 50% from the previous period. However, the stock price falls after getting the news on a day when all of the other stocks are barely moving. This is
A. at least potentially consistent with the efficient market hypothesis because investors may have been anticipating 25% gains.
B. absolutely illogical.
C. at least potentially consistent with the efficient market hypothesis because investors may have been anticipating 75% gains.
D. at least potentially consistent with the efficient market hypothesis because investors may have been anticipating those 50% gains.
Answer: C
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When the central bank increases the monetary base, the purchasing power of previously existing currency ________, and this essentially transfers wealth ________
A) increases; from those who own existing currency to the government B) decreases; from those who own existing currency to the government C) increases; from the government to those who own existing currency D) decreases; from the government to those who own existing currency
Answer the following statements true (T) or false (F)
1. The Glass Steag all Act was passed in 1932 to prevent ruinous competition in the banking industry. 2. The Financial Services Modernization Act of 1999 seeks to restrict competition between insurance companies and banks. 3. The Financial Services Modernization Act of 1999 is likely to result in fewer financial institutions. 4. Electronic transfers now account for nearly 90 percent of the dollar value of all transactions in the United States. 5. Cash transactions account for about 20 percent of the value of transactions. 6. Stored value and smart cards are forms of electronic banking.
If the central bank uses monetary policy to increase the ____________ rate, then commercial banks will reduce their borrowing of reserves from the Fed.
a. savings b. discount c. activity d. return
Which of the following most closely approximates the conditions of a competitive price-searcher market?
a. the market for Grade A eggs, which is characterized by a large number of firms producing a homogeneous product b. the restaurant industry, which is characterized by firms producing a differentiated product in a market with low entry barriers c. local cable television service, where a licensed supplier competes with firms offering satellite service d. the market for jumbo aircraft, where one major domestic firm competes with one major foreign firm