Question

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 went up by 3% right after the report was released. Does this mean a failure for the Market Efficient Theory?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Market efficient hypothesis advocates that all the publicly available information as well as privately available information have already been incorporated into the stock price and market will only react to the new information available.

When the stock announced its quarterly earnings it reflected that it has seen contraction into its overall sales but the share price increased because decrease of salesl have already been incorporated into the stock price as management are believed to be the insiders and they would have acted on the quarterly information before it was made public so show so it is in direct contradiction of efficient market hypothesis as the privately available information was not discounted in the price.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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 went up by 3% right after the report was released. Does this mean a failure for the Market Efficient Theory?
For the quarter ended March 31, 2020, Croix Company accumulates the following sales data for its...
For the quarter ended March 31, 2020, Croix Company accumulates the following sales data for its newest guitar, The Edge: $328,100 budget; $303,000 actual. In the second quarter, budgeted sales were $382,900, and actual sales were $398,900. Prepare a static budget report for the second quarter and for the year to date. CROIX COMPANY Sales Budget Report For the Quarter Ended June 30, 2020 Second Quarter Year to Date Product Line Budget Actual Difference Budget Actual Difference Guitar: The Edge...
For the quarter ended March 31, 2017, Croix Company accumulates the following sales data for its...
For the quarter ended March 31, 2017, Croix Company accumulates the following sales data for its newest guitar, The Edge: $322,300 budget; $304,800 actual. In the second quarter, budgeted sales were $381,400, and actual sales were $389,000. Prepare a static budget report for the second quarter and for the year to date. CROIX COMPANY Sales Budget Report For the Quarter Ended June 30, 2017 Second Quarter Year to Date Product Line Budget Actual Difference Budget Actual Difference
At year end ABC Company had the following on December 31, 2018:        Currency and coin on...
At year end ABC Company had the following on December 31, 2018:        Currency and coin on hand                                                        $500                 Checking account balance                                                           900                Money Market account balance                                                1,000        IOU’s from employees                                                                 100        Certificate of Deposit, originating 12/1/18, due 2/1/19            2,000        6 month Treasury Bill, purchased 9/30/18                                3,000        GE Stock, purchased 12/1/18, planning to sell 1/31/19            1,500        What amount should ABC report as the balance in the Cash and Cash Equivalents           account at year end, December 31, 2018? $4,500 $5,900 $8,900 $2,500 $4,400
The company PR Products Corp. estimates that its quarterly sales for the next year are as...
The company PR Products Corp. estimates that its quarterly sales for the next year are as follows: (units) The price per unit is $ 70 1. 1 Quarter 30,000 units 2. 2 Quarter 50,000 3. 3 Quarter 60,000 4. 4 Quarter 40,000 Accounts receivable as of December 31 are $ 90,000. The company estimates that sales are charged 60% in the quarter they are made and 40% in the following quarter. Finished Goods' desired ending inventory represents 20% of next...
ABC Company, a retailer, prepares its master budget on a quarterly basis. The following data has...
ABC Company, a retailer, prepares its master budget on a quarterly basis. The following data has been assembled to assist in preparation of the master for the first quarter. a. As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances. ASSETS LIABILITIES AND EQUITY Cash $ 47,000 Accounts Payable $ 92,000 Accounts Receivable 224,000 Capital Stock 500,000 Inventory 60,000 Retained Earnings 109,000 Buildings and Equipment (net of depreciation) 370,000 TOTAL ASSETS...
On December 31, 2020, Berclair Inc. had 200 million shares of common stock and 3 million...
On December 31, 2020, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2021, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2021. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2021, was $150 million. Also outstanding at December...
Winnie's Wearable Masks Budgeted Income Statement For the Quarter Ending September 30, 2020 Sales Variable Expenses:...
Winnie's Wearable Masks Budgeted Income Statement For the Quarter Ending September 30, 2020 Sales Variable Expenses:    Variable Manufacturing Expense Variable S&A Expense Contribution Margin Fixed Expenses:    Fixed Manufacturing Expense    Fixed S&A Expense Net Operating Income Interest Expense Net Income following balance sheet as of the end of the 2nd quarter on June 30, 2020: Each mask is referred to as a finished good unit. Although the company makes both adult and children’s sizes, each mask will be...
On December 31, 2020, Jackson Company had 100,000 shares of common stock outstanding and 28,000 shares...
On December 31, 2020, Jackson Company had 100,000 shares of common stock outstanding and 28,000 shares of 6%, $50 par, cumulative preferred stock outstanding. On February 28, 2021, Jackson purchased 22,000 shares of common stock on the open market as treasury stock for $33 per share. Jackson sold 5,800 treasury shares on September 30, 2021, for $35 per share. Net income for 2021 was $178,905. Also outstanding during the year were fully vested incentive stock options giving key executives the...
On December 31, 2020, Jackson Company had 100,000 shares of common stock outstanding and 36,000 shares...
On December 31, 2020, Jackson Company had 100,000 shares of common stock outstanding and 36,000 shares of 5%, $50 par, cumulative preferred stock outstanding. On February 28, 2021, Jackson purchased 30,000 shares of common stock on the open market as treasury stock for $41 per share. Jackson sold 6,600 treasury shares on September 30, 2021, for $43 per share. Net income for 2021 was $186,905. Also outstanding during the year were fully vested incentive stock options giving key executives the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT