According to Results by Seyhun, the Main Reason That Investors

question 76

Multiple Choice

According to results by Seyhun, the main reason that investors cannot earn excess returns by following inside trades after they become public is that ________.

• A) the information isn't available for at least 2 weeks
• B) transaction costs offset abnormal returns
• C) the SEC late-disclosure rule doesn't apply to insiders
• D) insiders don't have to disclose their trades

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Definitions:

Direct Write-off Method

Accounting practice where uncollected receivables are directly written off against income when deemed uncollectible, without using an allowance account.

Bad Debt Expense

A financial accounting concept representing the amount of uncollectible accounts receivable that a company expects to write off as a loss.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that may not be collectible, reflecting potential losses.

Allowance for Doubtful Accounts

A contra asset account used to estimate the portion of accounts receivable that is expected to be uncollectible.