On a particular day, a mining company reveals that, due to new extraction technology, the extractable yield from several of its mines has risen by 15%. Which of the following is the LEAST likely consequence of such an announcement?

Question

Quizplus · Accepted Answer

When the mining company reveals that the extractable yield from several of its mines has risen by 15%, investors would likely revise their estimates of the net present value (NPV) of the firm and increase their forecast of future cash flows in that firm, leading to an increase in the share price due to the pressure to buy. However, it is unlikely that investors would determine that the estimates of the firm's value on the date prior to the announcement were too high. Rather, the announcement suggests that the company has become more valuable due to the increased extractable yield, so previous estimates of the firm's value would be revised upwards.

On a Particular Day, a Mining Company Reveals That, Due