An Important Assumption Underlying the Use of Technical Analysis Techniques

question 82

Multiple Choice

An important assumption underlying the use of technical analysis techniques is that ________.

• A) security prices adjust rapidly to new information
• B) security prices adjust gradually to new information
• C) security dealers will provide enough liquidity to keep price changes relatively small
• D) all investors have immediate and costless access to information

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Definitions:

Average Collection Period

The average amount of time it takes for a company to receive payments owed by its customers.

Net Accounts Receivable

The total amount of money owed by customers for purchases made on credit, minus any provision for doubtful accounts.

Sales Returns

Transactions where customers return previously purchased merchandise, resulting in a refund or credit.

Bad Debt Expense

An expense recorded to account for receivables that are not expected to be collected, reflecting credit losses in the financial statements.