Which of the Following Statements Is FALSE

question 86

Multiple Choice

Which of the following statements is FALSE?

• A)Many managers make the mistake of focusing on accounting earnings as opposed to free cash flows.
• B)Given accurate information about any two of these variables (a firm's future cash flows,its cost of capital,and its share price)a valuation model allows us to make inferences about the third variable.
• C)A valuation model will tell us the most about the variable for which our prior information is the least reliable.
• D)The idea that investors are able to identify positive NPV trading opportunities is referred to as the efficient markets hypothesis.

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Definitions:

Elasticity

A measure of how much the quantity demanded or supplied of a good or service changes in response to a change in its price.

Efficiency Loss

The loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Demand and Supply

The fundamental concepts of economics that demonstrate how the quantity of goods or services demanded by consumers relates to the quantity supplied by producers at various prices.

Inelastic

Describing a situation where the demand or supply for a product does not significantly change in response to price changes.