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. However, the stock price falls after getting the news on a day when all of the other stocks are barely moving. This is
A. at least potentially consistent with the efficient market hypothesis because investors may have been anticipating 25% gains.
B. absolutely illogical.
C. at least potentially consistent with the efficient market hypothesis because investors may have been anticipating 75% gains.
D. at least potentially consistent with the efficient market hypothesis because investors may have been anticipating those 50% gains.
Answer: C
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a. True b. False
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