XYZ is a company listed in the stock market. Suppose it had a closing price yesterday...
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XYZ is a company listed in the stock market. Suppose it had a closing price yesterday of sh.90, but new information was announced after the market closed that caused a revision in the forecast of the price for next year to rise to sh.120. If the annual equilibrium return on XYZ is 15%. Determine what the efficient market hypothesis indicates the price will be today when the market opens. (12 marks) XYZ is a company listed in the stock market. Suppose it had a closing price yesterday of sh.90, but new information was announced after the market closed that caused a revision in the forecast of the price for next year to rise to sh.120. If the annual equilibrium return on XYZ is 15%. Determine what the efficient market hypothesis indicates the price will be today when the market opens. (12 marks)
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