Why do financial markets depend on accurate accounting and disclosure practices?
What will be an ideal response?
Investors in primary and secondary markets make decisions on which firms to invest in, when to invest, how much to invest, and when to sell based on information about firms. If the information is misleading, investors will invest less or, possibly, stop investing. Capital markets depend on accurate information and can function poorly when information is misleading.
You might also like to view...
Employers often end up laying off more workers during a recession due to ________
A) higher corporate taxes B) flexible wages C) tight monetary policy D) downwardly rigid wages
In the former Soviet Union distributing scarce consumer goods was accomplished by
A. higher prices which eliminated some potential consumers. B. making the consumer stand in a long line for hours if not days. C. the government simply printing more money. D. None of the choices are true.
A consumption tax is a tax on
a. goods but not on services. b. the amount of income that people spend. c. the amount of income that people earn. d. the amount of income that people save.
The aggregate supply curve is
A. generally flatter as the level of resource use rises. B. never vertical, even at full employment. C. relatively flat at low levels of output. D. relatively steep at low levels of output.