How capital markets are efficient

Reference no: EM13298206

The ceo of high tech inter. decides to change an accounting method at the end of the current year. the change results in reported profits increasing by 5%, but the companys cash flows are not changed. if capital markets are efficient, then:

a- the stock price will increase due to higher profits
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 only if the accounting change will also result in higher profits in the next year

Reference no: EM13298206

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