Chapter 4
Multiple Choice
1. Which of the following research approaches emphasizes going from the specific to the general?
2. Which of the following research approaches is based on the concept of utility or usefulness?
3. Which of the following research approaches is attributed to DR Scott?
4. Which of the following outcomes of providing accounting information is an attempt to identify
individual securities that are mispriced by reviewing all available financial information?
5. Which of the following outcomes of providing accounting information is an attempt to deal with
both risks and returns?
6. Which of the following outcomes of providing accounting information is based on the supply
and demand model
7. The efficient market hypothesis holds that that financial markets price assets at their intrinsic
worth, given all available information. Which of the following forms of the efficient market
hypothesis defines all available information as knowledge of past security prices?
8. The efficient market hypothesis holds that that financial markets price assets at their intrinsic
worth, given all available information. Which of the following forms of the efficient market
hypothesis defines all available information as all publicly available information including past
stock prices?
9. The efficient market hypothesis holds that that financial markets price assets at their intrinsic
worth, given all available information. Which of the following forms of the efficient market
hypothesis defines all available information as information, including security price trends,
publicly available information, and insider information?
10. Which of the following anomalies are related to particular time periods?
11. Which of the following anomalies are related to strategies designed to outperform the market?
12. Which of the following anomalies are related to investing techniques that attempt to forecast
security prices by studying past prices and other related statistics?
13. What theory on the outcomes of providing accounting information attempts to answer the
question: What is an individual’s expected benefit from a particular course of action?
14. Which of the following is not viewed as a cost to the principal in an agency relationship?
15. What theory on the outcomes of providing accounting information attempts to assess an
individual’s ability to use information?
16. Which of the following is not a conclusion that has been drawn from human information
processing research?
17. What theory on the outcomes of providing accounting information rejects the view that
knowledge of accounting is grounded in objective principles
Essay
1. Briefly describe the following research approaches:
2. What is fundamental analysis and what is its goal?
3. Describe the efficient market hypothesis and its three forms.
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4. Define the following heuristics:
5. Discuss the capital asset pricing model including the concepts of unsystematic risk, systematic
risk and beta.
6. Discuss the difference between normative and positive accounting theory.
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7. What is the basic assumption of agency theory? Why is the relationship between shareholders
and management an agency relationship?
8. What is the goal of human information processing studies? What are the genera findings of these
studies and what is the implication for accounting?
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9. Discuss the concept of critical perspectives research in accounting.
10. Discuss the relationship among research, education, and practice in accounting.