1. TTC has released this quarter’s earning report. It states that it changed how it accounts for inventory. The change does not change taxes, but the resulting earnings are 20% higher than what it would have been under the old accounting system. There is no other surprises in the earnings report. 1. Would the stock price now jump on the release of this earnings report?
2. Can you expect to earn excess returns if you make trades based on your broker’s information about record earnings for a stock, rumors about a merger of a firm, or yesterday’s announcement of a successful test of a new product, if the market is semi-strong form efficient?