Which of the following does NOT correctly complete this sentence: In general, the link between an information announcement and the stock price is that ____________________.
A) The expected stock return will change if the announcement contains a surprise component.
B) The stock price will not change if the announcement provided only anticipated information.
C) Only announcements that have already been discounted will affect the stock price.
D) In order for the price of the stock to change, the announcement must be relevant to that particular stock and must be unanticipated.
E) If markets are efficient in the semi-strong form, then the market will react rapidly to the new information.

Question

Quizplus · Accepted Answer

C) is incorrect because it suggests that only previously considered or "discounted" announcements will affect stock prices, which contradicts the general understanding that it's new, unanticipated information that impacts stock prices.

Which of the Following Does NOT Correctly Complete This Sentence