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 expect Magic Tape to close at $28 the day of the announcement.
B. You would lose $1,800.
C. You would lose $2.00 per share
D. You would lose $4,000.
You do a study and find out that, on average, stock prices for firms decrease 3% for every 5% decrease in inside ownershi