Which of the following are the most likely reasons for why a stock price might not react at all on the day that new information related to the stock issuer is released?
I.Insiders knew the information prior to the announcement
II.Investors need time to digest the information prior to reacting
III.The information has no bearing on the value of the firm
IV.The information was anticipated
A) I and II only
B) I and III only
C) II and III only
D) II and IV only
E) III and IV only

Question

Quizplus · Accepted Answer

The information having no bearing on the value of the firm (III) and the information being anticipated (IV) are the most likely reasons for a stock price not reacting to new information. If the information is irrelevant to the company's value or if investors already expected the news, the stock price might not change.

Which of the Following Are the Most Likely Reasons for Why