You hear that Ford is likely to announce strong fourth-quarter profits at its next shareholders' meeting. You excitedly decide to buy some Ford stock. When you look up Ford stock prices, you notice that Ford's stock price ________. This is because ________.

Question

Quizplus · Accepted Answer

If the news of strong fourth-quarter profits has already become public knowledge, then the markets have already adjusted the stock price accordingly, resulting in a rise before the shareholder meeting. This is based on the assumption that markets are informationally efficient, meaning that stock prices reflect all publicly available information.

You Hear That Ford Is Likely to Announce Strong Fourth-Quarter