Read and evaluate the following paragraph extracted from Cooper and Keim (1983; p202): lt should also be

Question:

Read and evaluate the following paragraph extracted from Cooper and Keim (1983;

p202):

lt should also be noted that the nature and degree of the effect of disclosure requirements (and other aspects of security regulation) on public confidence in the financial markets is unknown. Investors who have never read a prospectus or even thumbed through a 10-K report may have a great deal more confidence in the capital markets because the SEC and its regulations are an integral aspect of the financial system. The salutary effect of such enhancement of the perceived integrity and credibility of the investment process is to reduce the cost of capital for all firms, and the magnitude of this effect may be quite significant.

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