Efficient Market Hypothesis Today, the following announcement was made: Early today the Justice Department reached a decision

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Efficient Market Hypothesis Today, the following announcement was made:

“Early today the Justice Department reached a decision in the Universal Product Care (UPC) case. UPC has been found guilty of discriminatory practices in hiring.

For the next five years, UPC must pay $2 million each year to a fund representing victims of UPC’s policies.” Assuming the market is efficient, should investors not buy UPC stock after the announcement because the litigation will cause an abnormally low rate of return? Explain.

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Corporate Finance With Connect Access Card

ISBN: 978-1259672484

10th Edition

Authors: Stephen Ross ,Randolph Westerfield ,Jeffrey Jaffe

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