Informational efficiency of the market for stocks of firm

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Reference no: EM131911023

At t=0, the management of Firm A decides that it will make an offer to acquire Firm B a week later (at t=1). At t=0, the stock prices of Firm A and Firm B both stay the same on average. However, at t=1, the stock price of Firm A falls and the stock price of Firm B rises.

What does this behavior imply about the informational efficiency of the market for the stocks of Firm A and Firm B?

Which form or forms of the Efficient Market Hypothesis is/are violated (if any)? Explain.

Reference no: EM131911023

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