10. (Market efficiency reaction to news) On 17 July 2015, ABC Corporation reported an increase of 2...
Question:
10. (Market efficiency— reaction to news) On 17 July 2015, ABC Corporation reported an increase of 2 cents in earnings per share (EPS). Nevertheless, the price of the stock dropped by $1.50. In contrast, on the same day, the DEF Company reported a decrease of 3 cents in its EPS, but the stock price rose by $2.20. A journalist wrote that “since this is the only new information received on 17 July about ABC and DEF, this proves that the stock market is inefficient.” Is the journalist’s statement correct?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Principles Of Finance With Excel
ISBN: 9780190296384
3rd Edition
Authors: Simon Benninga, Tal Mofkadi
Question Posted: