If Major Traders Believe the Price of a Stock Should

question 18

Multiple Choice

If major traders believe the price of a stock should be higher than its current market price,

• A)they have an incentive to bid down the price of the stock.
• B)their actions will result in the information they possess being incorporated into the price of the stock.
• C)there is little they can do because government regulation precludes their acting on what they know.
• D)they should petition the Securities and Exchange Commission to authorize an adjustment in the price of the stock.

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Definitions:

Finished Goods

Units of product that have been completed but not yet sold to customers.

Ending Balance

The amount of money in an account at the end of a financial period, after all additions and subtractions have been accounted for.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard hourly labor rate.

Labor Rate Variance

The difference between the actual hourly wage paid to workers and the standard or expected hourly wage.