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Assume that a company announces unexpectedly high earnings in a particular quarter. In an efficient market one might expect _____________.A. an abnormal price change immediately after the announcementB. an abnormal price increase before the announcementC. an abnormal price decrease after the announcementD. no abnormal price change before or after the announcement

Respuesta :

Answer:

A. an abnormal price change immediately after the announcement

Explanation:

  • A Quarterly earnings report that is made for the public companies to report their earnings such as net income, EPS and continued operations, understanding of these reports provide the investors with the sales, expenses and other investments.
  • High earnings lead to high prices. As these processes may lead to potential fluctuations and manipulations variety of these changes in prices can be easily brought about by the changes in the market conditions.
  • Thus prices may tend to bounce back and decline immediately after the announcements in the stocks.

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