According to Which Hypothesis Below, the Market Generally Reacts Favorably

question 7

Multiple Choice

According to which hypothesis below, the market generally reacts favorably to an asset sale because such sales promote efficiency by allocating assets to better uses.

• A)the financing hypothesis of asset sales
• B)the efficient deployment hypothesis
• C)the information hypothesis
• D)the fire-sales hypothesis

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Definitions:

Inventory Destroyed

This term describes inventory items that have been lost, damaged beyond repair, or otherwise rendered unusable and must be written off from the business's accounts.

Retail Inventory Method

An accounting technique used by retailers to estimate inventory levels based on the cost to retail price ratio.

Net Markups

Net Markups refer to the increase in the selling price of goods beyond their purchase price, net of any discounts or allowances.

Cost-to-Retail Ratio

A method used in retail to convert the cost of goods available for sale into the retail price.