worth more the sooner it is received Investopedia - Time Value of Money - TVM. (2014). Retrieved from http://www.investopedia.com/terms/t/timevalueofmoney.asp Efficient market A market in which prices quickly respond to the announcement of new information book Primary versus secondary market that the primary market deals with the newly issued securities while the secondary market deals with already traded securities. When the companies issue securities in the primary market‚ they collect funds
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Investopedia. Retrieved July 1‚ 2014‚ from http://www.investopedia.com/terms/t/timevalueofmoney.asp Efficient market An efficient market is a market where all information is available to all market participants at any time. This means that people can make investment decisions based on factual information immediately after that information is available. My own common knowledge‚ no cite necessary. Primary versus secondary market “Primary vs. secondary market says that the primary market deals with
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are freely granted or auctioned to the highest bidder. 2. With respect to Asymmetric Information: a. Discuss two major types of information asymmetry in the private sector and how they lead to market failure. b. Discuss a public sector remedy for each problem. c. Discuss a private sector remedy for each. d. Discuss two major sources of market failure due to information asymmetry in relation to the provision of public goods and services by the government.
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& Psillaki‚ M. (2010) “Capital structure‚ equity ownership and firm performance”‚ Journal of Banking & Finance‚ Vol. 34‚ 3‚ pp. 621-632 Talmor‚ E (1984) “The determination of corporate optimal capital structure under value maximzation and information asymmetry”‚ Journal of Economics and Business‚ Vol. 36‚ 1‚ pp. 65-75 Theilen‚ B. (2003) “Simultabeous moral hazard and adverse selection with risk averse agents”‚ Economics Letters‚ Vol. 79‚ 2‚ pp. 283-289 Philosophov‚ L. V. & Philosophov‚ V. L. (1999)
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there is no research trying to explain factors comprehensively influencing it. The obyectives of the research are to test and explain the effect of the internal control effectiveness‚ suitability of reward‚ compliance to accounting rules‚ information asymmetry‚ management morality toward unethical behavior and intention to accounting fraud. More particularly‚ the research attempts to get the causal relationship between the variables involved. Questionnaire was used to collect data. The analysis unit
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Describe either an adverse selection or moral hazard problem a company is facing. What is the source of the asymmetric information? Who is the less-informed party? Are there any wealth-creating transactions not consummated as a result of the asymmetric information? If so‚ could you consummate them? What advice/recommendations would you give the company? The healthcare debate has been characterized as an argument between those who believe that moral hazard is the primary problem with healthcare market
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announcement returns‚ higher combined surplus gains‚ higher target announcement returns‚ and better prior target performance. Fewer firm-specific MAC exclusions appear to be credible signals of higher target quality and are more prevalent when information asymmetries are likely high and signaling is particularly beneficial. In contrast‚ more market-wide MAC exclusions are not associated with higher acquirer or target gains although acquirers tend to assume the largely exogenous‚ market-wide interim risk
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management of the company who are not the owners but are involved in managing the company. They possess more information than the shareholders and stakeholders so information asymmetry arises between them. Without regulation‚ even though management might disclose relevant accounting information voluntarily in order to get funding‚ the degree of credibility and completeness of information is unclear. According to the analysis of Lang and Lundholm‚ the accounting disclosures specifically for firms
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Part 2. Total 50 marks ( 10 marks each). 1. Explain why you would be more or less willing to buy gold under the following circumstances: a. Gold again becomes acceptable as a medium of exchange. (2 marks) b. Prices in the gold market become more volatile. (2 marks) c. You expect inflation to rise‚ and gold prices tend to move with the aggregate price level. (3 marks) d. You expect interest rates to rise. (3 marks) Outline of solutions: (a) More‚ because it has become more liquid;
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shareholder wealth maximization is severely limited. However‚ this is not always the case. Managers may have discretion to pursue their objectives before those of the shareholders as there is information asymmetry between the two parties. Berk and DeMarzo (2011:533) state that the managers’ ‘information about the firm and its future cash flows is likely to be superior to that of outside investors’. This statement is reinforced by Aboody and Lev (2000:2749) who assert that ‘managers can continually
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