EFFICIENT MARKET THEORY Definition

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EFFICIENT MARKET THEORY is the hypothesis that market prices reflect the knowledge and expectations of all investors. Within this theory, investors who adhere to it believe it to be highly improbable that market movement can be predicted, i.e., using darts to chose stocks are just as effective as stock or market analysis.

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DISCRETIONARY COST can be increased or decreased at the discretion of the decision maker (e.g., advertising and business travel).

ACCRUED ASSETS are assets from revenues earned but not yet received.

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