A Financial Market Is Efficient If Financial Prices

question 116

Multiple Choice

A financial market is efficient if financial prices:

• A) fully and correctly reflect all available information.
• B) reflect information only available to traders.
• C) adjust to any information.
• D) allow for consistent short-term profits to be made.
• E) yield returns for owners of capital.

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Definitions:

FIFO

First In, First Out, an inventory valuation method where goods purchased or produced first are sold or consumed first.

Average Cost Method

An inventory costing method that determines the cost of goods sold and ending inventory based on the weighted average cost of all items available for sale.

Gross Profit

calculates as the difference between revenue and the cost of goods sold, indicating how efficiently a company uses its resources to produce goods.

Ending Inventory

The total value of all inventory, including goods in various stages of production, available at the end of an accounting period.