If Share Prices Follow a Random Walk Then Investors Can

question 56

Multiple Choice

If share prices follow a random walk then investors can make large profits illegally by

• A) using computer programs that perform technical analysis using past share price trends.
• B) performing fundamental analysis of shares using data contained in annual reports.
• C) quickly responding to rumours of mergers between companies.
• D) using insider information.

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Definitions:

Initial Endowment

The starting set of assets, goods, or resources that an individual or economy possesses before engaging in any transactions.

Taxes Rise

An increase in the compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.

Taxicabs

Vehicles for hire equipped with a driver, used by individuals or small groups to travel from one location to another for a fare.

Auto Insurance

A contract between a vehicle owner and an insurance company, providing financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle.