Which of the Following Statements Is True

question 18

Multiple Choice

Which of the following statements is true?

• A) The presence of asymmetric information in financial markets increases the likelihood that these markets are efficient.
• B) Accounting profits are always more important to shareholders than cash flows.
• C) Managers should choose investment projects that maximize shareholder wealth.
• D) The study of finance only benefits students who aspire to careers in business.
• E) Investors should not be compensated with a higher return for owning risky securities since they should know better than to buy stock in a firm that has uncertain prospects.

---

Definitions:

Market Analysis

A comprehensive evaluation of the market's size, trends, and growth prospects, often used to inform business strategies.

Topical Organization

A method of structuring information by dividing it into topics or categories for clarity and ease of understanding.

Informational Reports

Documents that provide facts and data without analysis or recommendations, intended to inform the reader about a specific topic.

Yardstick Approach

Logical argumentation approach that uses a number of criteria to evaluate one or more possible solutions.