Question 2:

You are a board member of a company listed on the Ghana stock exchange. During the most recent Board of Directors` meetings held this afternoon in the company`s premises, it was announced that the company has won a multi-billion dollar contract that will certainly change its fortunes forever.

The company`s earnings are therefore expected to grow by 56% this year to an all-time high of 250 million Ghana cedis. The chief finance officer established the growth of profit to remain at such level to at least five years and thereafter settle at 25 % per annum.

A potential investor has paid a colossal amount of twenty thousand Ghana cedis to obtain this information hoping to reap some benefits from investing in the company`s shares.

Required:

Critically analyze whether or not the investor will benefit from this deal assuming that the market is:

i. Weak form efficiency

ii. Semi-strong form efficiency

iii. Strong form efficiency