Asked by Damir Hollis on Jul 07, 2024
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Prior to the announcement of bad news earnings (a negative earnings surprise) ,stock returns exhibit
A) a negative drift downward.
B) no change in stock returns.
C) a negative drift downward followed by an immediate upward drift.
D) a positive drift upwarD.
Bad News Earnings
Reports of lower than expected earnings, often leading to a negative reaction in the stock market and a decrease in company’s share price.
Negative Earnings Surprise
An event where a company's reported earnings are below the expectations of analysts, often leading to a decline in its stock price.
Stock Returns
The income generated from the investment in shares, comprised of dividends received and capital gains or losses.
- Comprehend the principle of market efficiency and its connection to fluctuations in stock prices following earnings releases.
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Learning Objectives
- Comprehend the principle of market efficiency and its connection to fluctuations in stock prices following earnings releases.
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