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Suppose an Efficient Market Has Been Operating with Regard to Stock

Question 21

Multiple Choice

Suppose an efficient market has been operating with regard to stock in a particular company and that company announces that its profits were up 50% from the previous period but the stock price falls after getting the news on a day when all of the other stocks are barely moving. This is


A) absolutely illogical.
B) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating 75% gains.
C) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating 25% gains.
D) at least potentially consistent with the efficient market hypothesis because investors may have been anticipating those 50% gains.

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