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Part $1$

ApnexApnex$,$

$$Inc$.,$ is a biotechnology firm that is about to announce the results of its clinical trials of a potential new cancer drug. If the trials are$$ successful,

ApnexApnex

stock will be worth

$ $61$$$61$

per share. If the trials are$$ unsuccessful,

ApnexApnex

stock will be worth

$ $16$$$16$

per share. Suppose that the morning before the announcement is$$ scheduled,

ApnexApnex

shares are trading for

$ $52$$$52$

per share.

a$.$ Based on the current share$$ price, what sort of expectations do investors seem to have about the success of the$$ trials?$$

b$.$ Suppose hedge fund manager

Paul KlinerPaul$$Kliner

has hired several prominent research scientists to examine the public data on the drug and make their own assessment of the$$ drug's promise. Would

KlinerKliner$\text{'}$s

fund be likely to profit by trading the stock in the hours prior to the$$ announcement?$$

c$.$ Which factors would limit the ability of

KlinerKliner$\text{'}$s

fund to profit on its$$ information?

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Part $1$

a$.$ Based on the current share$$ price, what sort of expectations do investors seem to have about the success of the$$ trials?$($Select the best choice$$ below.$)$

A$.$

The market seems to have no clue about what will happen to the stock price.

B$.$

The market seems to expect a$50\%$ decline in the stock price.

C$.$

The market seems to assess a somewhat greater than$50\%$ chance of success.

D$.$

The market seems to believe the trials will not be successfu