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Explain the effect on a company’s stock price today of the following events, other things held constant.

a. the interest rate on the company’s bonds falls.

b. Several companies in the same sector announce surprisingly slow sales.

c. Changes in the tax laws passed last year reduce this year’s profit.

d. The company unexpectedly announces that due to an accounting error, it must amend last year’s accounting statement and reduce last year’s reported profit by $5 million. It also announces that this change has no implications for future profits.

  • economics -


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