Answer:
D) Stock prices of companies that announce increased earning in January tend to outperform the market in February.
Explanation:
The above is consistent with the Efficient Market Hypothesis. All others are a direct contravention.
<em>The efficient market hypothesis (EMH), also known as the efficient market theory, is a hypothesis that states that the prices of shares contain all information and that consistent alpha generation is impossible.</em>
According to the hypothesis, stocks always trade at their fair value on exchanges, making it impossible for investors to purchase undervalued stocks or sell stocks for inflated prices.
This means that it should not be possible to outperform the overall market through professional stock selection or market timing.
The only way according to EMH that an investor can obtain better returns is by purchasing riskier investments.
By implication, this also means that it is not possible to "beat the market" consistently on a risk-adjusted basis since market prices should only react to new information.
You would note that in the option D, earning (which is a key driver for demand of stock) is announced in one month. The natural reaction would be for the demand for that stock to surge in the next month.
Answer:
Retrenchment strategy
Explanation:
Retrenchment strategy is often used in order to cut expenses with the goal of becoming a more financial stable business. A company that is reducing the scope of its activities by selling unprofitable business units or those no longer directly related to its overall aims is likely following a retrenchment strategy
The following are characteristics of Retrenchment strategy:
- designed to reduce the scale or scope of a corporation's business/ operations
- weaker competitors often resort to retrenchment when national business environments grow more competitive
- company that is closing factories with unused capacity and laying off worker sis likely following a retrenchment strategy
Answer: D -
It enables the viewer to both see and hear the information.
Explanation:
Answer:
60,120 units
Explanation:
The computation of the production units is shown below:
Production units = Projected sales units + ending inventory units - beginning inventory units
= 58,900 machines + 7,310 units - 6,090 units
= 60,120 units
We simply added the ending inventory units and deduct the beginning inventory units to the projected sales units so that the correct amount could come
Answer:
Dr Retained Earnings 500,000
Cr Com. Stock Dividend Distributable 100,000
Cr Add’l Paid – in Capital, Com. Stock 400,,000
Explanation:
Preparation of the journal entry
Dec. 31
Dr Retained Earnings 500,000
[(100,000 x (50/100)* 10 market price]
Cr Com. Stock Dividend Distributable 100,000
[(100,000 x (50/100)*2 par value ]
Cr Add’l Paid – in Capital, Com. Stock 400,,000
(500,000 – 100,000 )
