Excessive Volatility Refers to the Fact That

question 85

Multiple Choice

Excessive volatility refers to the fact that

• A)stock returns display mean reversion.
• B)stock prices can be slow to react to new information.
• C)stock price tend to rise in the month of January.
• D)stock prices fluctuate more than is justified by dividend fluctuations.

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Definitions:

FASB

The Financial Accounting Standards Board, an organization responsible for setting and improving financial accounting and reporting standards in the U.S.

IASB

The International Accounting Standards Board, responsible for developing and enforcing the International Financial Reporting Standards (IFRS).

Fair Value Measurement

An accounting approach that provides an estimate of the price at which an asset could be exchanged or a liability settled, based on current market conditions.

Financial Instruments

Contracts that give rise to both a financial asset of one entity and a financial liability or equity instrument of another entity, such as stocks, bonds, or derivatives.