Which two economic concepts are fundamental to the relevance of fair values to accounting? i. The Efficient Markets Hypothesis
ii. Supply and Demand
iii. Economic Rationalism
iv. Marginal Utility

Question

Quizplus · Accepted Answer

The Efficient Markets Hypothesis (EMH) suggests that asset prices fully reflect all available information, which is fundamental to the idea of fair values in accounting as it assumes markets are efficient and the fair value is the price at which an asset would be bought or sold in a transaction between willing parties. Economic Rationalism, which assumes individuals make decisions based on rational evaluations, supports the concept of fair value by assuming that the transactions used to determine fair values are made rationally.

Which Two Economic Concepts Are Fundamental to the Relevance of Fair