Release before the stock market opened announcing

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Reference no: EM132014501

Geothermal corporation issued a press release before the stock market opened announcing that its earnings set a record for the highest ever. Explain how each of the following individual scenarios could be consistent with the semi-strong form of market efficiency.

(a) When trading opened after the announcement, the stock price quickly decreased by 20%.

(b) The stock price of Geothermal decreased slowly over the 30 days before the announcement that earnings were the highest ever.

(c) The stock price increased by 10% immediately following the announcement but then decreased throughout the day so that the closing price was only 2% above the previous day.

(d) The stock price of Geothermal did not change after the announcement was made public.

Reference no: EM132014501

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