Purchase Solution

Share price and investor expectations

Not what you're looking for?

Ask Custom Question

Apex Inc., is a biotechnology firm that is about to announce the results of its clinical trials of a potential new cancer drug. If the trials were successful, apnex stock will be worth $70 per share. If the trials were unsuccessful, Apnex stock will be worth $18 per share. Suppose that the morning before the announcement is scheduled. Apnex shares are trading for $55 per share.

a. Based on the current share price, what sort of expectations do investors seem to have about the success of the trials?

b. Suppose hedge fund manager , Paul kliner has hired several prominent research scientists to examine the public data on teh drug and make their own assessment of the drug's promise. What would Kliner fund be likely to profit by trading the stocks inteh hours prior to the announcement?

c. What would limit the funds ability to profit on its information?

Purchase this Solution

Solution Summary

The solution explains the relation between share price and investor expectations

Solution Preview

a. Based on the current share price, what sort of expectations do investors seem to have about the success of the trials?

Since the price is closer to $70, investors are expecting the probability of success is much higher as compared to ...

Purchase this Solution


Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Learning Lean

This quiz will help you understand the basic concepts of Lean.