You read a story in the newspaper announcing the proposed merger of Dell Computer and Gateway. The merger is expected to greatly increase Gateway’s profitability. If you decide to invest in Gateway stock, you can expect to earn
You read a story in the newspaper announcing the proposed merger of Dell Computer and Gateway. The merger is expected to greatly increase Gateway’s profitability. If you decide to invest in Gateway stock, you can expect to earn
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You read a story in the newspaper announcing the proposed merger of Dell Computer and Gateway. The merger is expected to greatly increase Gateway’s profitability. If you decide to invest in Gateway stock, you can expect to earn
(a) above-average returns since you will share in the higher profits.
(b) above-average returns since your stock price will definitely appreciate as higher
profits are earned.
(c) below average returns since computer makers have low-profit rates.
(d) a normal return since stock prices adjusts to reflect expected changes in profitability almost immediately.
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