Financial managers must be cognizant of market eﬃciency because:
A)manipulating earnings by accounting changes does not fool the market.
B)timing security sales is futile because without private information the current price reﬂects
All known information.
C)there is limited price pressure from any large sale of equity depressing prices momentarily
Which then recover to prior levels.
D)the market as a whole is shrewd.
E)All of the above.

Question

Quizplus · Accepted Answer

All of the above options are valid reasons why financial managers must be aware of market efficiency. Manipulating earnings through accounting changes may not fool the market, timing security sales without private information is futile, any large sale of equity may only depress prices momentarily, and the market as a whole is shrewd. Therefore, financial managers must keep these factors in mind when making decisions regarding investments, sales, and accounting practices.

Financial Managers Must Be Cognizant of Market Eﬃciency Because