Informational Efficiency in Financial Markets Results in Stock Prices Being

question 12

Multiple Choice

Informational efficiency in financial markets results in stock prices being

• A)higher.
• B)lower.
• C)fairer.
• D)easier to predict.

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Definitions:

Payback Period

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.

Working Capital

The amount of a company's current assets minus its current liabilities, indicating the short-term financial health and operational efficiency of a business.

Salvage Value

The projected value of an asset when it reaches the end of its operational life.

Discount Rate

The discount rate applied in the calculation to ascertain the current value of forthcoming cash flows through discounted cash flow analysis.