Choices Between Various Accounting Methods Should Not Affect Stock Prices

question 17

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:

Psychological Disorders

Mental health conditions characterized by alterations in thinking, mood, or behavior associated with distress and/or impaired functioning.

Stereotype

A fixed, overgeneralized belief about a particular group or class of people.

Mental Illness

A wide range of mental health conditions that affect mood, thinking, and behavior, including depression, anxiety disorders, schizophrenia, and bipolar disorder.

Hippocampal Volume

The size of the hippocampus, a brain region associated with memory and navigation, which can influence cognitive functions.