Which of the Following Statements Is False

question 15

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:

Personality

The combination of characteristics or qualities that form an individual's distinctive character.

Attitudes

A predisposition to respond in a favorable or unfavorable manner to a particular idea, object, person, or situation.

Fundamental Attribution Error

The bias of overattributing behaviors of others to their personal characteristics, while underestimating situational factors.

Perceptual Distraction

A phenomenon where the focus of attention is diverted due to irrelevant stimuli in the environment, affecting cognitive processes.