What impact on the price of the stock can be expected in an efficient market when the company announces large dividend payout Introduction: Abnormal return refers to the term that is taken into consideration to portray the return ascertained from a portfolio or security over a particular time period which stands different from the rate of return expected out of such portfolio.

Question

Want to see the full answer?

Answer 1

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 11, Problem 2CP

Summary Introduction

To determine:

What impact on the price of the stock can be expected in an efficient market when the company announces large dividend payout

Introduction:

Abnormal return refers to the term that is taken into consideration to portray the return ascertained from a portfolio or security over a particular time period which stands different from the rate of return expected out of such portfolio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

In the event of unexpected news announcement, such as a significant reduction in profit expectations, which of the following is NOT a likely stock price reaction?: Select one: a. The price instantaneously adjusts to the new information. b. No reaction, since the market has already learned to "expect the unexpected" The price over-adjusts to the new information, but eventually falls to the appropriate price. d. The price partially adjusts to the new information.

A company's stock price jumped when it announced that its revenue had decreased because of the quality issues of its products. This is an example of market risk Ounsystematic risk O undiversifiable risk O systematic risk

The weak-form of EMH implies which of the following may be used to earn an abnormal return and beat the market(a) Technical analysis using all past price information (b) Fundamental analysis using company accounts’ data (c) Insider trading (d) Both answers B and C

Answer 2

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 11, Problem 2CP

Summary Introduction

To determine:

What impact on the price of the stock can be expected in an efficient market when the company announces large dividend payout

Introduction:

Abnormal return refers to the term that is taken into consideration to portray the return ascertained from a portfolio or security over a particular time period which stands different from the rate of return expected out of such portfolio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 11, Problem 2CP

Summary Introduction

To determine:

What impact on the price of the stock can be expected in an efficient market when the company announces large dividend payout

Introduction:

Abnormal return refers to the term that is taken into consideration to portray the return ascertained from a portfolio or security over a particular time period which stands different from the rate of return expected out of such portfolio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

Chapter 11, Problem 2CP

Summary Introduction