Asked by
Chelsea Dinnin
on Dec 02, 2024
Verified
If a firm receives bad news about its future earnings prospects, what should happen to the stock price in order to maintain the required return desired by new investors?
A) The stock price should increase.
B) The stock price should decrease.
C) The stock price remains unchanged.
D) The stock price remains the same, but dividends will decrease.
Future Earnings Prospects
The expected profitability of a company or investment in future periods based on current and forecasted conditions.
Stock Price
The market value of a single share of a company's stock, determined by supply and demand dynamics in the stock market.
- Understand the implications of market efficiency on stock prices and returns.
Verified Answer
CM
Learning Objectives
- Understand the implications of market efficiency on stock prices and returns.