Why Is the Efficient Securities Market Hypothesis Important for Accounting

question 27

Multiple Choice

Why is the efficient securities market hypothesis important for accounting?

• A)When providing financial information, management need only consider the specifically identifiable users who they know will rely on the information.
• B)Accounting standards can assume that the majority of market participants have a reasonable level of sophistication.
• C)Individuals with information that is not publicly available cannot make significant profits.
• D)Accounting information is the only source of financial information that markets use.

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, thus having a partial ownership in the company.

Shareholders

Individuals or entities that own shares in a corporation, granting them certain rights and potential financial benefits from the company's performance.

Dissolved

The process of officially ending the existence of a corporate entity or partnership through legal means.

U.S. Constitution

The supreme law of the United States of America, establishing the framework of the national government and the rights of citizens.