A company announces that its earnings have increased 25 percent from the previous year, but analysts actually

Question:

A company announces that its earnings have increased 25 percent from the previous year, but analysts actually expected a 50 percent increase. What is the likely effect on the stock price?

a. The stock price will increase.

b. The stock price will decrease.

c. The stock price will rise and then fall after an overreaction.

d. The stock price will not be affected.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Fundamentals Of Investments Valuation And Management

ISBN: 9781266824012

10th Edition

Authors: Bradford Jordan, Thomas Miller, Steve Dolvin

See More Books

Question Posted: Dec 29, 2023 09:55 PM

See More Questions

A company announces that its earnings have increased 25 percent from the previous year, but analysts actually expected a 50 percent increase. What is the likely effect on the stock price? a. The...
Which of the following functions are NOT differentiable: (A) f(x) = |x| (B) f(x) = (x+3) (C) f(x) = 1066 (D) f(x) = mx + b (E) None of the above
A company announces that its earnings have decreased 25 percent from the previous year, but analysts expected a small increase. What is the likely effect on the stock price? a. The stock price will...
Dozier Industries Inc. manufactures only one product. For the year ended December 31, 2014, the contribution margin increased by $38,500 from the planned level of $1,386,000. The president of Dozier...
Make comparisons of thermoplastic and thermosetting polymers (a) On the basis of mechanical characteristics upon heating, and (b) According to possible molecular structures.
Determine the horizontal and vertical components of force at each pin. The suspended cylinder has a weight W. Given: W = 80 lb d = 6 ft a = 3 ft e = 2 ft b = 4 ft r = 1 ft c = 4 ft B
Discuss the merits of the different types of planning.
What are some pros and cons of holding high levels of current assets in relation to sales? Use the DuPont equation to help explain your answer.
1 2 company has three products Product 101. Product 102 and Product 103. Income statements of the three product lines for the latest month are given below. GHI Company has three product lines. The...
Dry methane is supplied by a compressor and precooling system to the cooler of a Linde liquid-methane system (Fig. 9.6) at 180 bar and 300 K. The low-pressure methane leaves the cooler at a...
A security is said to be overvalued relative to another security if its price today is too high given its expected return and risk. Suppose you observe the following: The risk-free rate is currently...
a. How is beta similar to a slope coefficient? b. Within the context of correlation, how is it possible for a stock to have a high variance but still have a low beta?
Following is an alphabetical list of Seeger Company's accounts and their unadjusted balances. All are normal balances. To save you time, the balances are in one- and two-digit numbers....
Link two articles from a trade journal in your field and discuss them in a short paper...
Evaluate vendors for supplying differentiated or specialized widgets. Review the "Supplier Scorecard Data" document and answer the questions below. 1. Discuss which supplier you will select,...
3. By keeping the leading term in the relativistic correction, the kinetic energy operator T of a relativistic electron in one dimension can be written as p 3p4 + 2m 8m3c2 where c is the speed of...
CHOOSE CORRECT OPTION How might inadequate training impact Thandiwe's ability to address classroom challenges? a. Develops effective teaching strategies b. Enhances problem solving skills and creates...
A 3.5-kg cannon on wheels is loaded with a 0.0527-kg ball. The cannon and ball are initially moving forward with a speed of 1.27 m/s. The cannon is ignited and launches a 0.0527-kg ball forward with...
Two aluminum plates 5 mm thick with a ground roughness of 100 in are bolted together with a contact pressure of 20 atm. The overall temperature difference across the plates is 80C. Calculate the...
Use a calculator to evaluate the expression. Round your result to the nearest thousandth. V (32 + #)
Evaluate the following argument: "Prepayment is not a risk to mortgage investors because prepayment actually means that the investor is paid both in full and ahead of schedule." Is the statement...
Mortgage pools also suffer from defaults. Explain how defaults are handled in a fully modified mortgage pool. In the case of a fully modified mortgage pool, explain why defaults appear as prepayments...
What is a collateralized mortgage obligation? Why do they exist? What are three popular types?
The following information is provided by Garden Gears for a new product it recently introduced: Total unit cost $50 Desired ROI per unit $22 Target selling price $72 How much is Garden Gears'...
Solid bank loan P5 million to a borrower on January 1, 2018. The terms of the loan require principal payments of P1 million each year for five years plus interest at 8%. The first principal and...
3) Assuming annual sales of $250,000 and a 50% gross (contribution) margin, calculate the following a. Average collection period if ending receivables total $45,000 b. Ending days-on-hand of...

A company announces that its earnings have increased 25 percent from the previous year, but analysts actually

Question:

Step by Step Answer:

The most likely effect on the stock price in this scenario is b The stock price will decrease Heres ...View the full answer

Fundamentals Of Investments Valuation And Management

Students also viewed these Business questions