An article in the Wall Street Journal contained the following: “Norfolk Southern Corp. on Thursday reported a surprise 25% profit jump in the first quarter.” The article also noted that after the announcement, Norfolk Southern’s stock rose 3.5%.

a. What is the relationship between a firm’s profits and its stock price?
b. If the increase in Norfolk Southern’s profits had not been a surprise, would the effect of the announcement on its stock price have been different? Briefly explain.