Instructions:
Please, respond to the below two cases and include at least 2 references (citation). This assignment should be about 2 pages total (around 500 words including only the answers.)
CASE 4-2 Supply and Demand
The efficient market hypothesis is an extension of the supply and demand model.
Required:
a. Discuss the assumptions of the supply and demand model inherent in the Efficient Market Hypothesis.
. Why is the securities market viewed as a good example of the supply and demand model?
c. Discuss the three forms of the Efficient Market Hypothesis.
CASE 10-3 Equity Method and Disclosures
On July 1, 2017, Dynamic Company purchased for cash 40 percent of the outstanding capital stock of Cart Company. Both Dynamic and Cart have a December 31 year‐end. Cart, whose common stock is actively traded in the over‐the‐counter market, reported its total net income for the year to Dynamic and also paid cash dividends on November 15, 2017, to Dynamic and its other stockholders.
Required:
a. How should Dynamic report the foregoing facts in its December 31, 2017, balance sheet and its income statement for the year then ended? Discuss the rationale for your answer.
. If Dynamic should elect to report its investment at fair value, how would its balance sheet and income statement differ from your answer to part (a)?