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Can you make any abnormal profit by trading the shares

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Question - The market for Gold & Copper Ltd opens for trading at 10 am. On a particular day the first trade of Gold & Copper's share occurs at 10.15 am and the price established in the market is $2 per share. At 10.30 am the management of the firm announces that a sizable deposit of gold has been discovered in one of its copper mines. The next trade takes place at 10.45 am at $2 per share. Soon the market realizes that the company has the good news and adjusts the price accordingly. The share price in its next trade at 11.00 am is established at $2.50 per share.

(a) Is this market efficient? Why or why not?

(b) Can you make any abnormal profit by trading the shares of Gold & Copper Ltd.?

Reference no: EM133168623

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