The Difference Between a Random Walk and a Submartingale Is

question 17

Multiple Choice

The difference between a random walk and a submartingale is the expected price change in a random walk is ______, and the expected price change for a submartingale is ______.

• A) positive; zero
• B) positive; positive
• C) positive; negative
• D) zero; positive
• E) zero; zero

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Definitions:

Operating Income

Earnings from a company’s primary business activities, excluding deductions of interest and taxes.

Variable Cost

Costs that vary directly with the level of production or output, such as raw materials and direct labor.

Transfer Price

The price at which goods and services are sold between divisions within the same company, often used for accounting and tax purposes.

Variable Cost

A cost that varies directly and proportionally with changes in production volume or activity level, such as materials and labor costs.