Choices Between Various Accounting Methods Should Not Affect Stock Prices

question 40

Multiple Choice

Choices between various accounting methods should not affect stock prices if

• A)and only if the financial markets are strong form efficient.
• B)the financial market is weak form efficient and the investors are at least somewhat rational.
• C)the markets have recently experienced the bursting of a market bubble.
• D)companies consistently select the most conservative of the allowable methods.
• E)markets are at least semistrong form efficient and firms provide sufficient information so investors can analyze those choices.

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Definitions:

Synovial

A type of joint that is surrounded by a fluid-filled capsule, facilitating movement.

Joints

Structures that connect two or more bones in the body, facilitating movement and support.

Alternative Dispute Resolution (ADR)

Alternative Dispute Resolution (ADR) is a collection of processes used for the resolving disputes without litigation, such as arbitration or mediation.

Mediation

A conflict resolution process where a neutral third party assists disputing parties to reach a mutually acceptable agreement.