Which of the Following Is $\underline{not}$ True Regarding Capital Market Research?
A)Studies Have Found a Low

question 35

Multiple Choice

Which of the following is $\underline{not}$ true regarding capital market research?

• A)Studies have found a low correlation between the variability of accounting earnings and beta.
• B)Studies have found a strong association between accounting-based ratios and the market measure of risk.
• C)Studies have found that supplemental segment (line of business) disclosures resulted in a revision of systematic risk, indicating that such information is useful for risk assessments.
• D)At least one study has found that pension information is not useful for risk assessments.

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Definitions:

Pure Play Method

A valuation technique that involves comparing the firm of interest to another company that has a single line of business similar to the target company.

Real Option

The right, but not the obligation, to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a project at a future date.

Capital Budgeting

The process of analyzing and ranking potential expenditures or investments that are significant in amount, to determine which projects will provide the best return.

Assigned Value

A valuation determined for an asset or liability, often used in accounting to assign costs or values.