f securities markets are rational and efficient in that they fully and correctly include all available information into a company’s stock price, the resulting price will reflect investors’ unbiased expectations about the company’s future earnings and cash flows.   True or False

An important element in accounting for investment securities concerns the distinction between its noncurrent and current classification. Required: a. Why do most companies maintain an investment portfolio consisting of both current and noncurrent securities? b. What factors should an analyst consider when evaluating whether investments in marketable equity securities are properly classified as current or noncurrent? How do these factors affect the accounting treatment for unrealized losses?

Which of the following statements is false?   A.   Mutual funds are pool investor funds to purchase financial instruments and thus reduce risks through diversification.   B.   Initial public offering (IPO) occurs when firm issues stock in the public market for the first time.   C.   The difference between current assets and non-current assets equals to working capital.   D.   Owner’s equity is the residual interest in assets that remains after subtracting an entity’s liabilities.

Which of the following is not an impairment indicator for investment securities? Group of answer choices decline in credit rating fluctuating stock prices adverse changes in the economy deterioration of earnings

What is the primary motivation of investors in performing security analysis? A-identify the best times to buy and sell securities  B-Contribute to the efficiency of securities markets C-Identify securities whose insrinsic values are at or near their market values  D-Identify mispriced stocks

The cost of capital can be thought of as the rate of return required by investors in the firm's securities. O a. false O b. true

Financial risk refers to the: Multiple Choice   possibility that interest rates will increase.   risk of owning equity securities.   the risk that the share price may not reflect all known information   general business risk of the firm.   risk faced by equity holders of firms with debt.

The disposition effect:   a. Is the tendency of stock investors to sell their winning stocks and hold onto their losing stocks   b. Is consistent with regret avoidance behaviour   c. Is a consequence of investors’ preference for lottery-type stocks   d. (a) & (b)   e. (a), (b) & (c)

Why do technical analysts look at the moving average of a company’s stock price, and why do they look at trend lines?  (Did you know that technical analysis is used for bond investing too?)

Which of the following statements is false?   A.   Internal controls are the processes by which the firm ensures that it presents accurate financial statements.   B.   Greenfield investments provide uncertain cash flows with high yields and high growth potential.   C.   Footnotes allow investors or any users to improve their assessments of the amount, timing, and uncertainty of the estimates reported in financial statements.   D.   Secondary markets are the markets in which existing, already outstanding securities are traded among investors.