Question 3 The April 20, 2010 explosion of BP's Deepwater Horizon oil rig caused an enormous amount of damage to the Gulf of Mexico. It also damaged the reputation and stock price of BP Oil. In the seven months prior to the explosion, BP's stock had been trading in the $55 to $60 range. During the three-month disaster, the stock was trading for as little as $27. On July 15 the leak was stopped by capping the wellhead after it had released 185 million gallons of crude oil into the Gulf of Mexico. At 3:35 pm when BP made the announcement that it had successfully capped the wellhead, the stock price of BP Oil increased by 7.6%, closing at $38.92. Required a. Is the share price reaction to the BP announcement at 3:35 pm an example of stock market inefficiency? b. Evaluate the relevance and reliability of the 3:35 pm announcement. c. Assume that BP also announced at 3:35 pm that it was changing its inventory accounting method from FIFO to average cost. Do you think that there would have been an additional stock market reaction?