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A company announces its intention to expand into a new market. If a market is informationally...

A company announces its intention to expand into a new market. If a market is informationally efficient, should it respond to the announcement? If so, how should it respond?

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Answer #1

No, if the markets are informational efficient, it will mean that all the publicly available information and the privately available information have already been discounted into the share prices and it will also mean that the market will be reflecting it upon the the various metrics of the the company about the the announcement of the intention to expanding into the new market, as it will already be known to the insiders of the company about entering into the new market and they would have impacted the share price of the company in the informationally Efficient market and Hence, it will not be making any difference.

It'll not responding to the the announcement of the company and the share prices of the company will be normally trading and when the market is highly efficient then the news will be even sold off.

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