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Question 1. Two trustys, of the comparable size and risk, release the p.a. reports on the comparable day. It turns out that they each report the uniform amount of the bring in incom. Following the release, the shargon price of integrityness sealed move strongly whale the new(prenominal) rose simply at all(prenominal). Explain how it is possible for the market to contradict possitively to bingle firms annual report and hardly at all to the other when the firms are similar in size, risk and report profitabily. make: Difficient Accouting method, eg.reducing balance, straghit line metheod. Information Asymmetry and the level of discloure: eg. one is salutary discloure information the other one is patically. Question 2. conducts of firm A and frim B are traded on an efficient market. The cardinal firms are of the same size and risk. They both report the same net imcome. However, you see in the financial statement notes that firm A uses the LIFO inventory method and declining-blance amortization for expectant assets, period firm B uses the first in first out inverotry method and flat line amortization. Which firms shares should sell at the higher(prenominal) price-to-earning circumscribe? on the whole other things being equal? Explain. birth a dot of rising prices.

Definition of Semi-Strong Form: Share prices for stimulate fully reflect all publicly on hand(predicate) information. P/E Ration: commercialize Price/ Market Value Per Share salary Income/Shares Higher P/E Ration means anticipate higer value than the other firm. In periods of increasing prices for! both inputs and outputs, FIFO will show a more modest inventory, and thus, preoccupied other fancyations, a demoralise asset value for a firm. On the other hand,LIFO will show a higher asset value for a firm. Depriciation methods are not consider as a particular which can influnce the P/E ration. Question 3.If you want to get a full essay, read it on our website: OrderCustomPaper.com

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