In a strong-form efficient market, accounting announcements: will impact stock price only if it is related to cash flows will impact stock price if it involves new public information will imoact stock brice if it it affects a firms ability to borrow funds will no impact stock price

In a strong-form efficient market, accounting announcements: will impact stock price only if it is related to cash flows will impact stock price if it involves new public information will imoact stock brice if it it affects a firms ability to borrow funds will no impact stock price

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 3MCQ

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Question

In a strong-form efficient market, accounting announcements:

will impact stock price only if it is related to cash flows

will impact stock price if it involves new public information

will imoact stock brice if it it affects a firms ability to borrow funds

will no impact stock price

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

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