Which of the Following Statements Is $\underline{not}$ Supported by Empirical Evidence from Capital Market Research?
A)Accounting Earnings

question 49

Multiple Choice

Which of the following statements is $\underline{not}$ supported by empirical evidence from capital market research?

• A)Accounting earnings appear to have information content and to affect security prices.
• B)Alternative accounting policies with no apparent direct or indirect cash flow consequences to the firm do not seem to affect security prices.
• C)There are no incentives to choose certain alternative accounting policies over others because there are never cash consequences.
• D)Accounting-based risk measures correlate with market risk measures, suggesting that accounting numbers are useful for risk assessment.

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Definitions:

Elastic Demand

A situation where the quantity demanded of a good or service changes significantly due to a change in its price.

Marginal Revenue Curve

A curve that shows the change in total revenue resulting from selling one additional unit of a product or service.

Standardized Product

Products that are uniform in quality and features, offering no significant difference from the same products offered by other sellers.

Differentiated Product

A product that is distinct from similar products offered by competitors, often through quality, features, or branding.