d. Discuss why, in the case of Dell, it is particularly difficult to determine the cause of the market reaction.

c. Most research studies would test for the market reaction to an announcement coming after the close of the market on the basis of the market reaction of the following day. In the case of Amgen. its shares on February 25, 1993. the following day. closed at 37, down 9.25 or 20%. The biotechnology index closed at 591.07, down 11.68% (i) Discuss why a research study might underestimate the ef- fects of the earnings announcement under these circum- stances (ii) The Wall Street Journal reported that the weakest stocks in the biotechnology group (on February 25, 1993) were Amgen, Chiron, and C'entocor. Chiron stock fell by 1.02% and Centocor was unchanged. Discuss how this information affects your response to (i).

f. These news items are examples of the flow of information about a company during the year. Assuming the projections implied by these news items prove to be true, discuss the ex- pected market reaction to the release of financial statements. Discuss whether these news nems make financial statements irrelevant. g. The Decre article does not deal with earnings, but rather with production. Discuss the relevance of financial statements in this case. 10. [News releases and market reaction] Avant! [AVNT] pro- duces software for the semiconductor industry Figure SP-1 pre- sents the daily stock price graph of the company for the months