Two weeks ago Ace Electronics announced that it had developed a new chip design which was being considered by major companies for use in future smart phone development.At the close of trading the day before the announcement,Ace common stock closed at $20.On the day following the announcement,Ace closed at $21.Two days after the announcement the stock closed at $22.50.Four days after the announcement the stock traded at $23.Last week,Ace stock traded at $26,a level it has maintained since then.This is an example of a(n) :
A) over-reaction and correction.
B) underpricing.
C) delayed reaction.
D) pre-activity action.
E) efficient market reaction.
Correct Answer:
Verified
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