Walkure A.G., a multinational corporation from Country A, announced the relocation of its manufacturing plants from Country B to Country C. The news about the relocation was never reported in the media. The move is expected to create positive synergies, as most of the company's other manufacturing operations are based in Country C. The relocation is also expected to lead to tax benefits. The company's shares are traded in three stock exchanges in Country A, Country B, and Country C. Share prices in the three stock exchanges responded to the relocation in three different ways: Country A: The share price increased drastically after the announcement. Country B: The share price decreased drastically after the announcement. Country C: The share price increased marginally after the announcement. Based solely on the information given, which of the following statements is least likely true of the stock exchanges?
Walkure A.G., a multinational corporation from Country A, announced the relocation of its manufacturing plants from Country B to Country C. The news about the relocation was never reported in the media. The move is expected to create positive synergies, as most of the company's other manufacturing operations are based in Country C. The relocation is also expected to lead to tax benefits. The company's shares are traded in three stock exchanges in Country A, Country B, and Country C. Share prices in the three stock exchanges responded to the relocation in three different ways: Country A: The share price increased drastically after the announcement. Country B: The share price decreased drastically after the announcement. Country C: The share price increased marginally after the announcement. Based solely on the information given, which of the following statements is least likely true of the stock exchanges?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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- Walkure A.G., a multinational corporation from Country A, announced the relocation of its manufacturing plants from Country B to Country C. The news about the relocation was never reported in the media. The move is expected to create positive synergies, as most of the company's other manufacturing operations are based in Country C. The relocation is also expected to lead to tax benefits. The company's shares are traded in three stock exchanges in Country A, Country B, and Country C. Share prices in the three stock exchanges responded to the relocation in three different ways:
- Country A: The share price increased drastically after the announcement.
- Country B: The share price decreased drastically after the announcement.
- Country C: The share price increased marginally after the announcement.
Based solely on the information given, which of the following statements is least likely true of the stock exchanges?
- The exchange in Country A is most
efficient, as the market reacted accurately to the announcement. - The exchange in Country B is inefficient, as the market reacted irrationally to the announcement.
- The exchange in Country C is most efficient, as the market reacted conservatively to the announcement.
- It cannot be determined which market reacted most efficiently without knowing the extent of the synergies and tax benefits.
- All of the above answers are correct.
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