Under the Efficient Markets Hypothesis, for News About a Company's

question 26

Multiple Choice

Under the efficient markets hypothesis, for news about a company's prospects to have a large impact on the price of the company's stock the news must

• A)have an impact on the company's profitability in the short term.
• B)have an impact on the company's profitability in the long term.
• C)significantly increase the likelihood that the company will go bankrupt.
• D)significantly affect the liquidity of the company's stock.

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Definitions:

Bonds Retired

The process of redeeming bonds before their maturity date, effectively removing them from circulation.

Old Equipment

Refers to machinery or tools that have been used over an extended period and may now be considered outdated or less efficient.

Indirect Method

A financial accounting technique used to prepare the cash flow statement, where changes in balance sheet items are adjusted to convert accrual-based net income into cash flow.

Operating Activities

Encompasses the revenue-generating activities of a business, including production, sales, and delivery of the company's product, as well as day-to-day operations.