Good Firm is highly profitable and will grow rapidly in the future. Bad Firm faces the same risks but barely makes a profit and

Question

Margaret [11]

3 years ago

10

Good Firm is highly profitable and will grow rapidly in the future. Bad Firm faces the same risks but barely makes a profit and

will not grow at all. In an efficient market, _____.

Business

1 answer:

RideAnS [48] · Answer 1 · 2022-02-21T23:31:05+03:00

Answer: B.both stocks are equally good investments

Explanation:

The options are;

A.it is better to buy shares in Bad Firm

B.both stocks are equally good investments

C.it is better to buy shares in Good Firm

D.both stock prices react equally to the same information

From the question, we are informed that Good Firm is highly profitable and will grow rapidly in the future while Bad Firm faces the same risks but barely makes a profit and will not grow at all. It should be noted that In an efficient market, both stocks are equally good investments.