Last week,New Plastics announced that it had developed a new plastic container that is stronger and more durable,yet easier to recycle.In response to this announcement,the firm's stock price rose from $21 a share to a high of $27 a share and has remained at that level.This is an example of a(n):
A)over-reaction and correction.
B)post-activity reaction.
C)delayed reaction.
D)pre-activity action.
E)efficient market reaction.

Question

Quizplus · Accepted Answer

The efficient market reaction refers to the immediate adjustment of the stock price in response to new information, which is exactly what happened in this scenario. The stock price increased in response to the announcement of the new product, and remained at a higher level, indicating that the market quickly incorporated this new information into the stock price.

Last Week,New Plastics Announced That It Had Developed a New