Question
In: Finance
On 3/31/2020, Company ABC released its quarterly report, showing the sales in the first quarter had...
On 3/31/2020, Company ABC released its quarterly report, showing the sales in the first quarter had tumbled 30% as pandemic hit. However, the stock price for company ABC rose by 3% (instead of fell by 3%) after the report is released. Does this mean a failure of the Market Efficient Theory?
Solutions
Expert Solution
Yes, this is a clear reflection of the failure of market efficiency theory, because market efficiency theory would be advocating that all the privately available information and the publicly available information should have been discounted into the stock price.
I will classify the quarterly report as an insider information and it should be bundled under the privately available information so these privately available information should have been discounted into the stock price according to the strong form of market efficiency but it was not be discounted because we can see there is a movement of 3% on upside after the announcement of the earnings so it is a clear violation of market efficiency theory.
it can be say that it is a failure of market efficiency theory because the privately available information was not discounted into the stock price.
jeff jeffy answered 2 years agoRelated Solutions
On 3/31/2020, Company ABC released its quarterly report, showing the sales in the first quarter had...
On 3/31/2020, Company ABC released its quarterly report, showing
the sales in the first quarter had tumbled 30% as pandemic hit.
However, the stock price for company ABC rose by 3% (instead of
fell by 3%) after the report is released. Does this mean a failure
of the Market Efficient Theory?
On 3/31/2020, Company ABC released its quarterly report, showing the sales in the first quarter had...
On 3/31/2020, Company ABC released its quarterly report, showing
the sales in the first quarter had tumbled 30% as pandemic hit.
However, the stock price for company ABC rose by 3% (instead of
fell by 3%) after the report is released. Does this mean a failure
of the Market Efficient Theory?
On 3/31/2020, Company ABC released its quarterly report, showing the sales in the first quarter had...
On 3/31/2020, Company ABC released its quarterly report, showing
the sales in the first quarter had tumbled 30% as pandemic hit.
However, the stock price for company ABC rose by 3% (instead of
fell by 3%) after the report is released. Does this mean a failure
of the Market Efficient Theory? please write equations and solve
step by step
company ABC released its quarterly report, showing the sales in the first quarter had tumbled 30%...
company ABC released its quarterly report, showing the sales in
the first quarter had tumbled 30% as pandemic hit. However, the
stock price for company ABC went up by 3% right after the report
was released. Does this mean a failure for the Market Efficient
Theory?
Oriole Inc. had sales of $2,260,000 for the first quarter of 2020. In making the sales,...
Oriole Inc. had sales of $2,260,000 for the first quarter of
2020. In making the sales, the company incurred the following costs
and expenses.
Variable
Fixed
Cost of goods sold
$925,000
$461,000
Selling expenses
74,000
91,000
Administrative expenses
109,000
100,000
Prepare a CVP income statement for the quarter ended March 31,
2020.
ORIOLE INC.
CVP Income Statement
select an income statement item
...
Blossom Inc. had sales of $2,300,000 for the first quarter of 2020. In making the sales,...
Blossom Inc. had sales of $2,300,000 for the first quarter of
2020. In making the sales, the company incurred the following costs
and expenses.
Variable
Fixed
Cost of goods sold
$936,000
$473,000
Selling expenses
119,000
71,000
Administrative expenses
116,000
120,000
Prepare a CVP income statement for the quarter ended March 31,
2020.
PT ABC is preparing its 4th quarter 2019 financial report (3 month period ended 31 December...
PT ABC is preparing its 4th quarter 2019 financial report (3
month period ended 31 December 2019), assuming the adjusting
entries are recorded at the end of the period. PT ABC’s
transactions in 2019 are:
● PT ABC has a bank payable of Rp. 10 billion since the end of
2018. The interest rate is 12% (no discount or premium). Interest
is paid every July 1 and January 1.
● PT ABC provided consulting services to PT Q in December...
ABC Company limited produces coat racks. The projected sales for the first quarter of the coming...
ABC Company limited produces coat racks. The projected sales for
the first quarter of the coming year and the beginning and ending
inventory data are as follows:
Sales
100,000 units
Unit price
SAR 15
Beginning inventory
8,000 units
Targeted ending inventory
12,000 units
The coat racks are molded and then painted. Each rack requires
four pounds of metal, which cost SAR 2.50 per pound. The beginning
inventory of materials is 4,000 pounds. ABC Company Limited wants
to have 6,000 pounds...
On March 31 a company needed to estimate its ending inventory to prepare its first quarter...
On March 31 a company needed to estimate its ending inventory to
prepare its first quarter financial statements. The following
information is available: Beginning inventory, January 1: $5,900
Net sales: $88,000 Net purchases: $86,000 The company's gross
margin ratio is 20%. Using the gross profit method, the estimated
ending inventory value would be:
1. Ulrich Inc. just announced the quarterly earnings report for its fiscal second quarter and a...
1. Ulrich Inc. just announced the quarterly earnings report for
its fiscal second quarter and a quarterly dividend. The net income
for the second quarter was $650,000, of which 30% will be paid as
dividends. The balance sheet at the end of the fiscal first quarter
had a retained earnings balance of $3,545,000. Calculate the
retained earnings that will be shown on the balance sheet at the
end of Ulrich's fiscal second quarter.
2. Ulrich Inc.'s articles of incorporation authorize...
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