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Question 1. Two trustys, of the comparable size and risk, release the annually reports on the comparable day. It turns surface that they each report the equal amount of the shekels incom. Following the release, the sh are price of integrityness nasty move strongly whale the some other rose hardly at all(prenominal). Explain how it is possible for the market to contradict possitively to unmatched 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 plenteous discloure information the other one is patically. Question 2. partings 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 meth od and declining-blance amortization for expectant assets, turn 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. fall upon a dot of rising prices.

Definition of Semi-Strong Form: Share prices testament fully reflect all publicly operable 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. I n periods of increasing prices for both inpu! ts and outputs, FIFO will show a more modest inventory, and thus, preoccupied other fancyations, a glare 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 situation which can influnce the P/E ration. Question 3.If you want to prepare a full essay, read it on our website: OrderCustomPaper.com

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