Which of the following is true about the impact on market price of a security when a company makes an announcement and the market has discounted the news?
A)The price will change a great deal; even though the impact is primarily in the future, the future value is discounted to the present.
B)The price will change little, if at all, since the impact is primarily in the future.
C)The price will change little, if at all, since the market considers this information unimportant.
D)The price will change little, if at all, since the market considers this information untrue.
E)The price will change little, if at all, since the market has already included this information in the security's price.

Question

Quizplus · Accepted Answer

When a market has discounted information, it means that the information has already been incorporated into the security's price. As a result, any announcement made by the company, even if it has an impact in the future, is unlikely to cause a significant change in market price. Therefore, the correct answer is E.

Which of the Following Is True About the Impact on Market