The Statement That Stock Prices Follow a Random Walk Implies

question 29

Multiple Choice

The statement that stock prices follow a random walk implies that
I.successive price changes are independent of each other;
II.successive price changes are positively related;
III.successive price changes are negatively related;
IV.the autocorrelation coefficient is either +1.0 or −1.0

• A)I only
• B)II and III only
• C)IV only
• D)III only

---

Definitions:

Stock Sale

The transaction or process of selling shares in a company to investors, transferring ownership in exchange for capital.

Percent Ownership

The percentage of a company or asset owned by an investor or group of investors, indicating the extent of their control or influence.

Stock Issuance

The process by which a company distributes new shares to investors, thereby raising capital.

Treasury Shares

Shares that were issued and subsequently reacquired by the issuing corporation, but not retired, reducing the amount of outstanding stock on the open market.