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Explain how this announcement can lead to a decline in the

1. The investors in exercise 2 are surprised by firm B's performance in year 5. Instead of being $20 million, the firm's profits are $40 million. What happens to firm B's stock price in years 6 and 7?

2. Nova Corporation just announced that it had a re- cord year. Its earnings have increased nearly 10 per- cent. Explain how this announcement can lead to a decline in the price of Nova Corporation's stock.

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Business Management: Explain how this announcement can lead to a decline in the

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