a) The DEFNOC MEDICS Corporation announces that over the next few years it will spend several billion dollars on developing a new product. The firms stock price falls dramatically after the announcement. According to the efficient markets hypothesis, what is the reason for the drop in price? If you were the president of DEFNOC MEDICS Corporation, what conclusions would you draw from the decline in your stock price?

b) Suppose the towns assessor says that he arrived at his assessment of $500,000 for the value of your house by competing how much it would cost to rebuild your house from scratch using the current cost of building materials. What would be your response