An example of financially irrational behavior is:
A) gambling in Las Vegas.
B) when a firm announces an increase in earnings and the stock price enjoys three days of large abnormal returns.
C) when a firm announces an increase in earnings and the stock price enjoys an immediate surge in value which is captured in one day.
D) Both gambling in Las Vegas; and when a firm announces an increase in earnings and the stock price enjoys three days of large abnormal returns.
E) Both gambling in Las Vegas; and when a firm announces an increase in earnings and the stock price enjoys an immediate surge in value which is captured in one day.

Question

Quizplus · Accepted Answer

Gambling in Las Vegas is often considered financially irrational due to the high risk and low probability of winning. Additionally, if a stock price experiences abnormal returns over three days after an earnings announcement, it suggests market inefficiency, as the information should be quickly reflected in the stock price.

An Example of Financially Irrational Behavior Is