According to Studies Cited in the Text, Increased Disclosure About

question 5

Multiple Choice

According to studies cited in the text, increased disclosure about financial price risks and risk management activities results in each of the following EXCEPT

• A) higher trading volumes
• B) increased risks of litigation over accounting disclosure practices
• C) increased share price sensitivity to underlying financial prices
• D) lower trading volume sensitivity to changes in underlying financial prices
• E) lower bid-ask spreads

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Definitions:

Technical Analysis

An approach to valuing securities by examining past patterns of price and volume. The technique is based on the idea that such patterns repeat themselves.

Preferred Stock

is a type of stock that provides a specific dividend that is paid before any dividends are paid to common stock holders, and typically does not have voting rights.

Periodic Payments

Recurring payments made over a period of time, such as monthly mortgage or insurance payments.

Voting Rights

The rights of shareholders to vote on corporate matters, such as the election of the board of directors.