The Volatility of Stock Prices,particularly in the Short-Run,may,according to Professor

question 61

Multiple Choice

The volatility of stock prices,particularly in the short-run,may,according to Professor S.Grossman,be due to

• A) large numbers of stockholders fearful of losing wealth who sell at some predetermined level.
• B) some traders being better informed than others about real financial conditions.
• C) either or both of the above.
• D) the increasing use of stock options as compensation for corporate executives.

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Definitions:

Plant Assets

Long-term tangible assets used in the operation of a business that are not intended for resale.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, often used to manage liquidity.

Capital Expenditures Budget

A plan that details a company's projected spending on long-term assets, such as property, plant, and equipment, which are expected to provide benefits over multiple years.

Merchandise Purchases Budget

A financial plan detailing the amount of goods a company needs to purchase during a period to meet expected sales demands and maintain inventory levels.