A bond has a face value of $$900$ and a $5\%$ coupon rate, its current price is $$840,$ and it is expected to increase to $$870$ next year.

If the actual market price immediately following the split is $$31\mathrm{.}00$ per share,

what does this tell us about market efficiency?

A$.$ No market failure is present. The market value of the securities is

underestimated; therefore, the price per share is rising until

$R^{of}=R^{**}.$

B$.$ Market efficiency is uncertain. The price could indicate both

market efficiency or failure depending on whether or not the stock

split actually conveyed information about the company.

C$.$ The market is efficient. The company is actively developing, and

the stock return is expected to increase. Therefore, the price fully

reflects available information.

D$.$ The market is inefficient. Some type of anomaly may have

occurred and the stock price should be higher.