Question
New Labs just announced that it has received a patent for a product that will eliminate all flu viruses. This news is better than the
New Labs just announced that it has received a patent for a product that will eliminate all flu viruses. This news is better than the market expected one month ago. Which one of the following reactions to this announcement indicates the market for New Labs stock is efficient?
A. The price of New Labs stock increases rapidly and then settles back to its pre-announcement level.
B. The price of New Labs stock remains unchanged.
C. All stocks quickly increase in value and then all but New Labs stock fall back to their original values.
D. The price of New Labs stock increases rapidly to a higher price and then remains at that price.
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