Question

If a cable news channel breaks news one morning that a major light bulb company announced a new long-lasting light bulb and you call your broker the next day to buy stock in the company, will you make money based on this information?

Answer 1

Buying stock based on a major product announcement does not guarantee making money.

Step-by-step explanation:

Buying stock in a company based on news of a major product announcement does not guarantee making money. Stock prices are based on expectations about the future, meaning that shifts in expectations will determine shifts in the stock price. While the news of a new long-lasting light bulb may lead to increased expectations for the company's future prospects, it is also possible that the stock price has already factored in this information, leading to minimal or no financial gain.