Mr. Park holds 150 shares of a construction company that currently trade at $24.30 per share. His group mate, who is an employee in the company, informs him that the stock price will decline over the next days because the company has failed in a project in Dubai and will announce about this after publishing the Annual Financial Report. Mr.Park does not believe his friend and holds all his shares. A week later, the construction company surprisingly for everyone announces the failure of Dubai deal, without waiting for Annual Report to be published and the stock price starts declining sharply, dropping to $15.12 in a couple of days. Was the market efficient or no? Please justify Your answer, using the calculations. Give the detailed explanation of EMH Theory.

Answer rating: 100% (QA)

1 Was the market efficient or not Please justify your answer using calculations To determine whether the market was efficient or not in this scenario we need to calculate the market reaction to the un... View the full answer