You do a study and find out that, on average, stock prices for firms - 6815

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You do a study and find out that, on average, stock prices for firms decrease 3% for every 5% decrease in inside ownership. You are watching the nightly business report and find out that Magic Tape’s stock has announced that insiders have sold 10% of their holdings. You are concerned because you own 1,000 shares of Magic Tape and it had closed the day before unchanged at $30 per share. If markets are at least semi-strong form efficient, what would you expect?

A.  You would lose $4,000.

B.  You would expect Magic Tape to close at $28 the day of the announcement.

C.  You would lose $1,800.

D.  You would lose $2.00 per share

Solution Description

You do a study and find out that, on average, stock prices for firms decrease 3% for every 5% decrease in inside ownership. You are watching the nightly business r