ExpertACCA · Question 21.4 · Financial Management Environment
Section B - Case 2: Quantum Mesh Inc
Scenario: Quantum Mesh Inc is a tech startup developing AI-driven satellite mesh networks. A venture capital firm is considering a buyout. Quantum Mesh has an operating profit (EBIT) of $5m, depreciation of $1m, and a corporate tax rate of 20%. Capital expenditure for the year was $1.5m, and working capital increased by $0.5m.
Question 4: Quantum Mesh is considering listing on the stock exchange. The directors believe the market is 'semi-strong form efficient'.
If the market is semi-strong form efficient, which of the following statements is true?
Section B - Case 2: Quantum Mesh Inc
Scenario: Quantum Mesh Inc is a tech startup developing AI-driven satellite mesh networks. A venture capital firm is considering a buyout. Quantum Mesh has an operating profit (EBIT) of $5m, depreciation of $1m, and a corporate tax rate of 20%. Capital expenditure for the year was $1.5m, and working capital increased by $0.5m.
Question 4: Quantum Mesh is considering listing on the stock exchange. The directors believe the market is 'semi-strong form efficient'.
If the market is semi-strong form efficient, which of the following statements is true?
Answer options:
Share prices fully reflect all publicly available information, so fundamental analysis will not yield abnormal returns.
Share prices reflect only past price movements, so technical analysis can still yield abnormal returns.
Share prices reflect all information, both public and private, so insider trading will not yield abnormal returns.
Share prices react slowly to new public announcements, allowing quick investors to make abnormal returns.
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