Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

43. Walkure A.G., a multinational corporation from Country A, announced the relocation of its manufacturing plants from Country B to Country C. The news about

43. Walkure A.G., a multinational corporation from Country A, announced the relocation of its manufacturing plants from Country B to Country C. The news about the relocation was never reported in the media. The move is expected to create positive synergies, as most of the company's other manufacturing operations are based in Country C. The relocation is also expected to lead to tax benefits. The company's shares are traded in three stock exchanges in Country A, Country B, and Country C. Share prices in the three stock exchanges responded to the relocation in three different ways:

Country A: The share price increased drastically after the announcement.

Country B: The share price decreased drastically after the announcement.

Country C: The share price increased marginally after the announcement.

Based solely on the information given, which of the following statements is least likely true of the stock exchanges?

a. The exchange in Country A is most efficient, as the market reacted accurately to the announcement.

b. The exchange in Country B is inefficient, as the market reacted irrationally to the announcement.

c. The exchange in Country C is most efficient, as the market reacted conservatively to the announcement.

d. It cannot be determined which market reacted most efficiently without knowing the extent of the synergies and tax benefits.

e. All of the above answers are correct.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

A Fast And Frugal Finance

Authors: William P. Forbes, Aloysius Igboekwu, Shabnam Mousavi

1st Edition

0128124954, 978-0128124956

More Books

Students also viewed these Finance questions