Question
q2. The market for Gold & Copper Ltd opens for trading at 10 am. On a particular day the first trade of Gold & Coppers
q2. The market for Gold & Copper Ltd opens for trading at 10 am. On a particular day the first trade of Gold & Coppers share occurs at 10.15 am and the price established in the market is $2 per share. At 10.30 am the management of the firm announces that a large deposit of gold has been discovered in one of its copper mines. The next trade of the share takes place at 10.45 am at $2 per share. However, by 11.00 am the market realises that the firm has good news and the price of share established at 11.00 was $2.50. (a) Is the market for Gold & Copper efficient? Why or why not? (b) Can you make any abnormal profit by trading the share of Gold & Silver? Explain how (1.5)
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