Which of the Following Statements Is True

question 18

Multiple Choice

Which of the following statements is true?

• A) The presence of asymmetric information in financial markets increases the likelihood that these markets are efficient.
• B) Accounting profits are always more important to shareholders than cash flows.
• C) Managers should choose investment projects that maximize shareholder wealth.
• D) The study of finance only benefits students who aspire to careers in business.
• E) Investors should not be compensated with a higher return for owning risky securities since they should know better than to buy stock in a firm that has uncertain prospects.

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Definitions:

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single participant has significant market power.

Sales Volume

The quantity of goods or services sold by a company within a specific period.

Price

The quote of currency expected, called-for, or donated as payoff for something.

Traffic Crossing

A designated place where vehicles and pedestrians are regulated in their movement to safely cross paths.