The primary reason the annual report is important in finance is that it is used by investors when they form expectations about the firm's future earnings and dividends, and the riskiness of those cash flows.

Question

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The annual report provides financial information about the company's performance, financial position, and future prospects, which are key factors for investors to make informed decisions about their investment in the company. Therefore, the annual report is important in finance as it helps investors form expectations about the firm's future earnings and dividends, as well as the riskiness of those cash flows.

The Primary Reason the Annual Report Is Important in Finance