Tests of Market Efficiency Tend to

question 71

Multiple Choice

Tests of market efficiency tend to

• A) look for statistical dependencies that exist in price changes over time.
• B) measure the nature of the impact of new information on security prices as that new information becomes available.
• C) search for trading systems that might be able to generate supernormal profits.
• D) all of the above

Perform transaction analysis, including its effects on the accounting equation and cash flows.

Understand cash flow from operating activities and its calculation.

Understand and describe the structure and components of a cash flow statement.

Apply accounting principles to prepare an income statement.

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Definitions:

Gross Margin

The difference between revenue and cost of goods sold, expressed as a percentage of revenue, indicating the financial health of a company’s sales.

Impairment Loss

A reduction in the recoverable amount of a fixed asset or goodwill, exceeding its carrying amount on the balance sheet.

Capital Assets

Long-term assets acquired for business use and not expected to be converted to cash in the coming year, typically including buildings, machinery, and equipment.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.