Financial Managers Must Be Cognizant of Market Efficiency Because

question 41

Multiple Choice

Financial managers must be cognizant of market efficiency because:

• A)manipulating earnings by accounting changes does not fool the market.
• B)timing security sales is futile because without private information the current price reflects
• All known information.
• C)there is limited price pressure from any large sale of equity depressing prices momentarily
• Which then recover to prior levels.
• D)the market as a whole is shrewd.
• E)All of the above.

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Definitions:

Short Run

A period in economics during which the quantities of some inputs, typically capital, cannot be changed, affecting how firms adjust production levels.

Long Run

A period of time in economics during which all inputs, including capital and labor, can be adjusted, and all markets are in equilibrium.

Shutdown Point

A situation in microeconomics where a firm's revenue is equal to its variable costs, indicating it would incur losses by continuing production.

Firm's Output

The overall amount of products or services generated by a company over a specific timeframe.