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.

---

Definitions:

Capital Punishment

A legal penalty in some jurisdictions where the state executes a person as a punishment for a crime.

Uniformly Distributed

A distribution where all outcomes are equally likely to occur, each observation within a certain range has the same probability.

Null Hypothesis

The assumption in statistical testing that there is no significant difference or effect and that any observed difference is due to chance.

Significant Change

A noticeable or meaningful variation that occurs in data, indicating a departure from expected patterns or previous results.