Which of the Following Statements Is FALSE

question 86

Multiple Choice

Which of the following statements is FALSE?

• A)Many managers make the mistake of focusing on accounting earnings as opposed to free cash flows.
• B)Given accurate information about any two of these variables (a firm's future cash flows,its cost of capital,and its share price)a valuation model allows us to make inferences about the third variable.
• C)A valuation model will tell us the most about the variable for which our prior information is the least reliable.
• D)The idea that investors are able to identify positive NPV trading opportunities is referred to as the efficient markets hypothesis.

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Definitions:

Fixed Price

A pricing strategy where the cost of goods or services is set and does not fluctuate with changes in the market or inventory costs.

Given Date

A specific date mentioned or defined within a particular context or document.

At the Money

A term used in options trading to describe an option with a strike price that is identical or very close to the market price of the underlying security.

Employee Stock Options

The right granted to employees by a company to buy its shares at a discounted price or a specific price within a specified time period.