Hitech, a biotechnology research firm, in a surprise announcement this morning relayed that it had discovered a cure for arthritis. The announcement comes after years of research and extensive human subject tests. Before today, Hitechs stock had been selling for $50 per share.

Assume that no other information about the company was released during the day and the stock market as a whole did not move.

You observe that around the time of the announcement Hitechs stock jumped up $10 per share. You also observe over the course of several days following the announcement that the price tended to stay at the new level. In a conversation over lunch one of your lunch party states The behavior of Hitechs stock price is inconsistent with capital market efficiency since the price jumped up while I knew that eventually someone would make such a discovery, albeit I did not know who or when it would be revealed. Is this individuals conclusion correct?

Group of answer choices

Yes

No

What's the present value of a perpetuity that pays $250 per year at the end of each year if the appropriate interest rate is 5% (assume annual compounding)?

Group of answer choices

$4,750

$5,250

$5,788

$5,513

$5,000