This statement is consistent with: Weak form efficiency Semistrong form efficiency Strong form efficiency Consider...
70.2K
Verified Solution
Link Copied!
Question
Finance
This statement is consistent with: Weak form efficiency Semistrong form efficiency Strong form efficiency Consider that there is a weak form of efficiency in the markets. A pharmaceutical company announces that it has received Federal Drug Administration approval for a new allergy drug that completely prevents hay fever. The consensus analyst forecast for the company's earnings per share EPS is $ but insiders know that, with this new drug, earnings will increase and drive the EPS to $ What will happen when the company releases its next earnings report? The stock price will increase and settle at a new equilibrium level. There will be some volatility in the stock price when the earnings report is released, but it is difficult to determine the impact on the stock price. However, the prices will eventually adjust to the news announcement. The stock price will not change, because the market already incorporated that information in the stock price when the announcement was made. 
This statement is consistent with:
Weak form efficiency
Semistrong form efficiency
Strong form efficiency
Consider that there is a weak form of efficiency in the markets.
A pharmaceutical company announces that it has received Federal Drug Administration approval for a new allergy drug that completely prevents hay fever. The consensus analyst forecast for the company's earnings per share EPS is $ but insiders know that, with this new drug, earnings will increase and drive the EPS to $ What will happen when the company releases its next earnings report?
The stock price will increase and settle at a new equilibrium level.
There will be some volatility in the stock price when the earnings report is released, but it is difficult to determine the impact on the stock price. However, the prices will eventually adjust to the news announcement.
The stock price will not change, because the market already incorporated that information in the stock price when the announcement was made.
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.