The January Effect Refers to the Fact That

question 71

Multiple Choice

The January effect refers to the fact that

• A)most stock market crashes have occurred in January.
• B)stock prices tend to fall in January.
• C)stock prices have historically experienced abnormal price increases in January.
• D)the football team winning the Super Bowl accurately predicts the behavior of the stock market for the next year.

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Definitions:

Fixed Costs

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.

Margin Of Safety

The difference between actual or expected sales and the break-even point, indicating the level of risk in failing to cover fixed costs.

Breakeven

The point at which total costs and total revenue are equal, resulting in no net loss or gain.

Sales

The exchange of a commodity or service for money; the action of selling something.