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:

Infant's Brain

Refers to the early developmental stages of the brain in babies, characterized by rapid growth and formation of neural connections.

Cephalocaudal

A principle of growth and development where growth starts at the head and progresses downwards towards the feet.

Proximodistal

Developmental progression where growth starts at the center of the body and moves toward the extremities.

Physical Development

The process that starts in human infancy and continues into late adolescent concentrating on gross and fine motor skills as well as puberty.