Why Is the Efficient Securities Market Hypothesis Important for Accounting

question 27

Multiple Choice

Why is the efficient securities market hypothesis important for accounting?

• A)When providing financial information, management need only consider the specifically identifiable users who they know will rely on the information.
• B)Accounting standards can assume that the majority of market participants have a reasonable level of sophistication.
• C)Individuals with information that is not publicly available cannot make significant profits.
• D)Accounting information is the only source of financial information that markets use.

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Definitions:

Time Series

A sequence of data points collected or recorded at time-ordered intervals, often used for forecasting and trend analysis.

Cyclical Variation

Fluctuations in statistical or economic data that occur over regular periods due to seasonal or economic cycles.

Directional Movement

A measure or concept in technical analysis used to predict the direction in which an asset's price is likely to move.

Random Variation

Random Variation describes the unpredictable fluctuations or differences that occur in data or a process due to chance.