Which of the Following Statements Is False

question 8

Multiple Choice

Which of the following statements is false?

• A) If the profit opportunities from having private information are large, other individuals will attempt to gain the expertise and devote the resources needed to acquire it.
• B) When private information is relegated to the hands of a relatively small number of investors, these investors may be able to profit by trading on their information.
• C) When a buyer seeks to buy a stock, the willingness of other parties to sell the same stock suggests that they value the stock differently.
• D) Since stock markets aggregate the information and views of many different investors, we expect the stock price to react slowly to new publicly available information as the investors continue to trade until a consensus is reached as to the new value of the stock.

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Definitions:

Cash Dividend

A payment made by a company out of its profits to its shareholders, usually in the form of cash.

Net Income

The total earnings of a company after subtracting all expenses, including taxes, from its total revenues.

Indirect Method

Indirect Method is a way of preparing the cash flow statement where net income is adjusted for non-cash transactions, changes in working capital, and other items to calculate cash flow from operating activities.

Operating Activities

Operating Activities involve the primary day-to-day actions related to producing and delivering a company's products or services, influencing cash flow and operating income.