Business, 20.02.2020 06:59, churchlady114p2met3

A pharmaceutical company announces that it has received Federal Drug Administration approval for a new allergy drug that completely prevents hay fever. The consensus analyst forecast for the company’s earnings per share (EPS) is $4.50, but insiders know that, with this new drug, earnings will increase and drive the EPS to $5.00. What will happen when the company releases its next earnings report? There will be some volatility in the stock price when the earnings report is released; it is difficult to determine the impact on the stock price. The stock price will increase and settle at a new equilibrium level. The stock price will not change, because the market already incorporated that information in the stock price when the announcement was made.

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A pharmaceutical company announces that it has received Federal Drug Administration approval for a n...