Asked by Kylee Crutchfield on Jul 11, 2024
Verified
Brady Lady Cosmetics just announced that earnings for the first quarter of the current year grew at an annualized rate of 3%, well above the rate for the same quarter the previous year. Upon the announcement, the stock price did not change. (The market in general was unchanged also.) Which of the following is most likely correct?
A) Brady's price didn't change since the market was surprised by the announcement.
B) Interest rates in the economy must have increased.
C) Brady's price didn't change because investors likely anticipated the news release.
D) Brady's price didn't change because the market in general was unchanged.
E) Brady must have a beta coefficient equal to 1.
Annualized Rate
A projected rate of return or growth over a period of one year, taking into account the effect of compounding over that period.
Beta Coefficient
The beta coefficient measures a stock's volatility in comparison to the overall market, indicating how much the stock price is likely to change relative to market movements.
- Analyze the impact of news announcements on stock prices and investor reactions.
Verified Answer
Learning Objectives
- Analyze the impact of news announcements on stock prices and investor reactions.
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