If a Friend Tells You That He Is Certain a Stock

question 80

Essay

If a friend tells you that he is certain a stock price will rise based on information he heard on television or saw on the Internet, should you be skeptical? Explain.

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Definitions:

Investment

The allocation of resources, such as time, money, or effort, in the expectation of generating a future benefit or profit.

Equity Carrying Amount

The net amount at which an asset or liability is reported in the balance sheet, often referring to the value of an investment in another entity after adjustments.

Net Assets

The total assets of an entity minus its total liabilities, representing the owner's or shareholder's equity in the entity.

AASB 128

The Australian Accounting Standards Board standard related to the accounting for investments in associates and to set out the application of the equity method when accounting for investments in associates and joint ventures.