11. (Market efficiency reaction to news) One of the earliest tests of market efficiency was to examine
Question:
11. (Market efficiency— reaction to news) One of the earliest tests of market efficiency was to examine the returns of stocks around the publication of their companies’ earnings reports. The graph below shows the price of XYZ stock 7 days before and after the earnings announcement date (date = 0). Assume that the only new information during this period is the publication of the earnings report showing higher profits than expected. Does the price pattern of XYZ stocks support the concept of market efficiency?
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: