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Statement 1: Firms with high prices relative to their fundamentals are more likely to be growth stocks than value stocks. Statement 2: The post earnings
Statement 1: Firms with high prices relative to their fundamentals are more likely to be growth stocks than value stocks. Statement 2: The post earnings announcement drift (PEAD) phenomenon finds that when a company has a positive (negative) earnings surprise, the market tends to over-react in the same direction as the surprise and that prices then reverse and drift slightly back in the other direction.
A. | Yes. | |
B. | No. Both are not true. | |
C. | No. Only statement 1 is true. | |
D. | No. Only statement 2 is true. |
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