The CEO of High Tech International decides to change an accounting method at the end of the
current year. The change results in reported profits increasing by 5, but the company's cash flows
are not changed.
If capital markets are efficient, then
A) the stock price will increase only if the accounting change will also result in higher profits in
the next year.
B) the stock price will not be affected by the accounting change.
C) the stock price will decrease because accounting method changes are not permitted under
generally accepted accounting principles.
D) the stock price will increase due to higher profits.
Question 2
Insurance companies invest in the long-end of the securities market by purchasing securities with
longer maturities. In which of the following instruments would an insurance company be least
likely to invest most of its assets?
A) corporate stocks B) mortgages
C) corporate bonds D) commercial paper
Spectrum of a High-Redshift Quasar
Anthropologist Andrea Wiley (left) investigates the effects of high-altitude living on reproductive
Carbon Dioxide, Trace Gases, and Climate Change
Climate Change: Volcanoes
Climate Change: Greenhouse gases Timescale
By 2100, significant change will be in the far northern latitudes, parts of Asia, and Sub-Saharan