Super Drugs (one of the three largest drug makers) just reported that its 2014 third-quarter profits are essentially the same as the 2013 third-quarter profits. In addition to this announcement, the same day, Super Drugs also announced that the Food and Drug Administration has just approved a new drug used to treat high blood pressure that Super Drugs developed. This new drug has been shown to be extremely effective and has few or no side effects. It will also be less expensive than the other drugs currently on the market.

Required

Using the above information, answer the following questions:

a.

What do you think will happen to the stock price of Super Drugs on the day these two announcements are made?

b.

Will the balance sheet be affected on that day by the above announcements?

c.

Will the income statement be affected on that day by the above announcements?

d.	Will the statement of cash flows be affected on that day by the above announcements?

The price per share of Super Drugs should substantially. This is a result of the expectation of future profits. The approval of the new drug signals that profits should be substantially in the future