Question
Geothermal corporation issued a press release before the stock market opened announcing that its earnings are below last years earnings. Explain how each of the
Geothermal corporation issued a press release before the stock market opened announcing that its earnings are below last years earnings. Explain how each of the following individual scenarios could be consistent with the semi-strong form of market efficiency. (a) When trading opened after the announcement, the stock price increased by 20%. (b) The stock price of Geothermal increased slowly over the 30 days before the announcement that earnings were lower than last year. (c) The stock price decreased by 10% immediately following the announcement but then increased throughout the day so that the closing price was only 2% below the previous day.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started