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NEW QUESTION: 1
NEW QUESTION: 2
Under the semi-strong form of the EMH, a company announcing stronger-than-expected earnings would present most investors with what type of abnormal profit opportunity?
A. no profit opportunity, because prices will adjust rapidly to the information
B. the potential for a modest profit as long as the investor acts within one or two hours
C. no profit opportunity for small investors but the potential for modest profit for large, sophisticated investors such as mutual funds
With semi-strong form efficiency, prices will adjust rapidly to new information, so by the time most investors have heard the earnings announcement and made decisions about their trading activity, the price will have already adjusted, thus eliminating the profit opportunity.
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