Signalling Theory Postulates That

question 7

Multiple Choice

Signalling Theory postulates that:

• A)Regulation is largely unnecessary.
• B)Non-disclosing entities will do better in the market for finance.
• C)Regulation decreases the cost of capital.
• D)Financial reporting is a pointless activity.

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Definitions:

Option Contract

A contract granting one the right, but not the obligation, to buy or sell an asset at a predetermined price within a specific timeframe.

Implied-in-Fact Contract

An implied-in-fact contract is an agreement that is not expressed in words but is inferred from the actions or conduct of the parties involved.

Original Agreement

The initial contract or understanding reached between parties, before any amendments, modifications, or terminations.

Automatically Terminated

Refers to a condition in contracts or agreements where certain actions or failures to act result in the termination of the agreement without the need for further legal action.