Followers of the efficient market hypothesis believe thatA) very few investors actually analyze or evaluate stocks before they make a purchase decision.B) the needed information to assess the market is available only to corporate insiders.C) investors react quickly and accurately to new information.D) individual traders can have a significant impact on the price of a security.

Answers

Answer 1

Answer:

Answer: Followers of the efficient market hypothesis believe that "C) investors react quickly and accurately to new information.".

Explanation: The efficient market hypothesis states that the current price of an asset in the market reflects all available information that exists (historical, public and private). It considers that any news or future event that may affect the price of an asset, will make the price adjust so quickly, that it is impossible to obtain an economic benefit from it.

This adjustment happens so fast because investors act quickly and accurately in the face of new information.

Related Questions

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In December 2016, Learer Company's manager estimated next year's total direct labor cost assuming 50 persons working an average of 2,500 hours each at an average wage rate of $20 per hour. The manager also estimated the following manufacturing overhead costs for 2017 Indirect labor Factory supervision Rent on factory building Factory utilities Factory insurance expired Depreciation-Factory equipment 494, 000 Repairs expense-Factory equipment Factory supplies used Miscellaneous production costs 50,000 Total estimated overhead costs $1,500, 000 $ 333, 200 128,000 154, 000 102,000 82, 000 74,000 82,800 At the end of 2017, records show the company incurred $1,600,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $618,000, Job 202, $577,000; Job 203, $312,000; Job 204, $730,000, and Job 205, $328,000. In addition, Job 206 is in process at the end of 2017 and had been charged $31,000 for direct labor. No jobs were in process at the end of 2016. The company's predetermined overhead rate is based on direct labor cost
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[The following information applies to the questions displayed below.] On July 23 of the current year, Dakota Mining Co. pays $4,715,000 for land estimated to contain 5,125,000 tons of recoverable ore. It installs and pays for machinery costing $410,000 on July 25. The company removes and sells 480,000 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine’s depletion as the machinery will be abandoned after the ore is mined. Required: Prepare entries to record the following. (Do not round your intermediate calculations. Round "Depletion per ton" to two decimal places and round all other answers to the nearest whole dollar.) (a) The purchase of the land. (b) The cost and installation of machinery. (c) The first five months' depletion assuming the land has a net salvage value of zero after the ore is mined. (d) The first five months' depreciation on the machinery.

Machinery purchased for $66,000 by Metlock Co. in 2016 was originally estimated to have a life of 8 years with a salvage value of $4,400 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2021, it is determined that the total estimated life should be 10 years with a salvage value of $4,950 at the end of that time. Assume straight-line depreciation.Required:
a. Prepare the entry to correct the prior year's depreciation, if necessary.
b. Prepare the entry to record depreciation for 2021.

Answers

Answer:

a. Prepare the entry to correct the prior year's depreciation, if necessary.

When an asset's useful life is extended, the extension is done prospectively, not retrospectively. This means that past depreciation does not need to be adjusted.

b. Prepare the entry to record depreciation for 2021.

Dr Depreciation expense 4,510
Cr Accumulated depreciation - machinery 4,510

Explanation:

purchase cost of machinery $66,000

estimated useful life 8 years

estimated salvage value $4,400

depreciation has been recorded using the previous basis during the first 5 years, but now the estimated useful life was extended to 10 years and the salvage value = $4,950

depreciation expense per year (during first 5 years) = ($66,000 - $4,400) / 8 = $7,700 per year

accumulated depreciation up to year 5 = $7,700 x 5 = $38,500

the carrying value of the asset on January 1, 2021 = $66,000 - $38,500 = $27,500

the new depreciation expense per year = ($27,500 - $4,950) / 5 = $4,510

depreciation expense for 2021:

Dr Depreciation expense 4,510

Cr Accumulated depreciation - machinery 4,510

On February 3, Gallatin Repair Service extended an offer of $122,000 for land that had been priced for sale at $140,000. On February 28, Gallatin Repair Service accepted the seller's counter offer or $133,000. On October 23, the land was assessed at a value of $200,000 for property tax purposes. On January 15 of the next year, Gallatin Repair Service was offered $213,000 for the land by a national retail chain. At what value should the land be recorded in Gallatin Repair Services records

Answers

Answer:

$133,000

Explanation:

According to the historical cost principle, the assets should be recorded at the purchase price or the acquisition cost. In this, no other cost should be recorded like assessed value, land improvements, etc

Since in the given question the Gallatin accepted the seller counter offer i.e. $133,000 so the same is to be presented in the financial statements

hence, the land should be recorded at $133,000

Each of the following factors affects the weighted average cost of capital (WACC) equation. Which are factors that a firm can control? Check all that apply. The firm’s capital budgeting decision rules
The firm’s capital structure Tax rates
The general level of stock prices

Answers

Answer:

The firm’s capital budgeting decision rules

The firm’s capital structure.

Explanation:

Capital budgeting is a term used to describe the proposed amount which a company has decided to set aside in the fort coming year to be spent on infrastructures or capital projects.

An organisation has the power to control its Capital budget, it also has the power to control its decision rules and it Capital structures (the contents of a company's capital spending).

A FIRM CAN NOT CONTROL THE TAX RATES AND THE GENERAL LEVEL OF STOCK PRICE WHICH ARE CONTROLLED BY GOVERNMENT AND EXTERNAL FORCES.

Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions). Target Corporation Wal-Mart Stores, Inc. Income Statement Data for Year Net sales $64,900 $405,000 Cost of goods sold 44,000 300,000 Selling and administrative expenses 14,000 75,000 Interest expense 650 1,800 Other income (expense) (70 ) (380 ) Income tax expense 1,300 6,500 Net income $ 4,880 $ 21,320 Balance Sheet Data (End of Year) Current assets $16,000 $45,000 Noncurrent assets 25,000 120,000 Total assets $41,000 $165,000 Current liabilities $10,000 $54,000 Long-term debt 16,800 43,000 Total stockholders’ equity 14,200 68,000 Total liabilities and stockholders’ equity $41,000 $165,000 Beginning-of-Year Balances Total assets $43,000 $162,000 Total stockholders’ equity 12,500 64,000 Current liabilities 10,000 54,000 Total liabilities 30,500 98,000 Other Data Average net accounts receivable $7,400 $3,800 Average inventory 6,800 32,800 Net cash provided by operating activities 5,500 25,500 Capital expenditures 1,600 11,500 Dividends 450 3,500 (a) For each company, compute the following ratios. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)(a) For each company, compute the following ratios. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)Ratio TargetWal-Mart(1) Current ratio Enter a number:1 Enter a number:1(2) Accounts receivable turnover Enter a numbertimes Enter a numbertimes(3) Average collection period Enter a numberdays Enter a numberdays(4) Inventory turnover Enter a numbertimes Enter a numbertimes(5) Days in inventory Enter a numberdays Enter a numberdays(6) Profit margin Enter percentages% Enter percentages%(7) Asset turnover Enter a numbertimes Enter a numbertimes(8) Return on assets Enter percentages% Enter percentages%(9) Return on common stockholders’ equity Enter percentages% Enter percentages%(10) Debt to assets ratio Enter percentages% Enter percentages%(11) Times interest earned Enter a numbertimes Enter a numbertimes(12) Free cash flow

Answers

Answer:

Target Wal-Mart

CURRENT RATIO 1,60 0,83

PROFIT MARGIN 7,52% 5,26%

ASSETS TURNOVER TIMES 1,55 2,48

TIMES INTEREST EARNED RATIO 10,51 16,46

LONG TERM DEBT RATIO 40,98% 26,06%

TOTAL DEBT/ASSETS RATIO 44,40% 26,61%

RETURN ON ASSETS 11,62% 13,04%

RETURN ON EQUITY 36,55% 32,30%

DAYS IN INVENTORY 56,41 39,91

INVENTORY TURNOVER 6,47 9,15

AVERAGE COLLECTION 41,62 3,42

ACC REC. TURNOVER 8,77 106,58

FREE CASH FLOW 3,900 14,000

Explanation:

Saturn Motorcycle's selected accounts as of December 31, 2018, follow: Selling Expenses $10,400
Interest Revenue 1,900
Net Sales Revenue 130,000
Cost of Goods Sold 81,000
Administrative Expenses 8,500

Required:
Prepare the multi-step income statement for the year ended December 31, 2018.

Answers

Solution and Explanation:

the following is the income statement for the year ending

Saturn motorcycle's

Income statement

year ending december 31, 2018

Particulars Amount

net sales revenue 130000

Less: cost of goods sold 81000

gross profit 49000

Less: operating expense:

Selling expenses 10400

adminstartive expenses 8500

Total operating expenses 18900

operating profit 30100

Non operating revenues ( expenses)

add: interest revenue 1900

total other revenue 1900

net income 32000

Note: every amount is in dollars

Final answer:

To prepare the multi-step income statement for Saturn Motorcycle for the year ended December 31, 2018, subtract the cost of goods sold from the net sales revenue to get the gross profit. Then, add the selling expenses and administrative expenses to get the operating expenses. Finally, add the operating income and other income to get the net income.

Explanation:

To prepare the multi-step income statement for Saturn Motorcycle for the year ended December 31, 2018, we need to include key components such as net sales revenue, cost of goods sold, selling expenses, administrative expenses, and interest revenue. Here is the breakdown:

Gross Profit: Subtract the cost of goods sold from the net sales revenue. (130,000 - 81,000 = 49,000)
Operating Expenses: Add selling expenses and administrative expenses. (10,400 + 8,500 = 18,900)
Operating Income: Subtract operating expenses from gross profit. (49,000 - 18,900 = 30,100)
Other Income: Include interest revenue. (1,900)
Net Income: Add operating income and other income. (30,100 + 1,900 = 32,000)

The multi-step income statement for Saturn Motorcycle for the year ended December 31, 2018 is as follows:

Saturn Motorcycle Income Statement

Net Sales Revenue$130,000Cost of Goods Sold$81,000Gross Profit$49,000Operating Expenses$18,900Operating Income$30,100Other Income$1,900Net Income$32,000

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The following information relates to Jay Co.’s accounts receivable for 2016: Accounts receivable balance, 1/1/2016 $650,000 Credit sales for 2016 2,700,000 Sales returns during 2016 75,000 Accounts receivable written off during 2016 40,000 Collections from customers during 2016 2,150,000 Allowance for uncollectible accounts balance, 12/31/2016 110,000 What amount should Jay report for accounts receivable, before allowances, at December 31, 2016?

Answers

Answer:

$1,085,000

Explanation:

The computation of the ending account receivable balance is shown below:

= Accounts receivable balance, 1/1/2016 + credit sales - sales returns - written off amount - Collections from customers

= $650,000 + $2,700,000 - $75,000 - $40,000 - $2,150,000

= $1,085,000

Since we have to find out the account receivable balance before allowances so we do not considered it.

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