The mechanistic hypothesis of capital markets means that:
A) investors are assumed to ignore differences in accounting policies when analysing financial statements.
B) investors are not easily fooled by changes in the depreciation rates.
C) investors respond differently to increases in profit when they result from cash flow implications as opposed to non-cash flow implications.
D) available information can be used to earn returns beyond those that compensate for the risk involved.

Question

Quizplus · Accepted Answer

Investors are assumed to ignore differences in accounting policies when analyzing financial statements under the mechanistic hypothesis.

The Mechanistic Hypothesis of Capital Markets Means That