Question

According to the efficient markets hypothesis, which of these events would cause the price of IBM stock to change?

1) Interest rates rise unexpectedly
2) IBM announces that revenues from last quarter were down
3) The decline in revenues was exactly what the public and analysts had expected

Answer 1

According to the efficient markets hypothesis, an unexpected announcement of a decline in revenues from last quarter would most likely cause a change in the price of IBM stock.

Step-by-step explanation:

According to the efficient markets hypothesis, the price of IBM stock would most likely change if the event is unexpected. In the given options, the event that would most likely cause a change in the stock price is when IBM announces that revenues from last quarter were down. This announcement would change the expectations of analysts and investors, leading to a potential decline in the stock price of IBM. On the other hand, if the decline in revenues was exactly what the public and analysts had expected, it is less likely to cause a significant change in the stock price.