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Zippy Computers announced strong fourth quarter results. Sales and earnings were both above analysts’ expectations. You notice in the newspaper that Zippy’s stock price went up sharply on the day of...

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Zippy Computers announced strong fourth quarter results. Sales and earnings were both above analysts’ expectations. You notice in the newspaper that Zippy’s stock price went up sharply on the day of the announcement. If no other information about Zippy became public on the day of the announcement and the overall market was down, is this evidence of market efficiency?
Answered Same Day Dec 24, 2021

Solution

Robert answered on Dec 24 2021
108 Votes
1

When an investor invests money into the stock market, the goal is to generate maximum revenue.
At the time of selecting stocks, an active investor not only tries to earn returns as per the market
trend but also aims to outperform the market.
The market efficiency theory was developed by Eugene Fama in 1970. The theory suggests that
the stock price of a particular share is reflective of all available data as regards the stock. This
need not be limited to the performance of the company in consideration but can also be
dependent upon other available information like political...
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