If the Market Is Efficient with Respect to Accounting Information,which

question 5

Multiple Choice

If the market is efficient with respect to accounting information,which of the following statements is true?

• A) Accounting reports are useless to investors.
• B) It is impossible to 'beat the market' using only accounting information that was released to the market 1 month ago.
• C) Knowing the contents of an annual report before it is released to the market would not be useful to an investor.
• D) Capital markets respond only to expected new information.

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Definitions:

Expected-Rate-Of-Return

The anticipated return on an investment, predicting future profit or loss.

Interest-Rate Cost-Of-Funds

The cost incurred by a financial institution to acquire the funds that it lends out to its customers, which is often influenced by prevailing market interest rates.

Marginal Cost

The rise in cost due to the production of an extra unit of a product or service.

Marginal Benefit

Marginal benefit refers to the extra benefit received from the consumption or use of an additional unit of a good or service.