Which One of the Following Statements Concerning the Random Walk

question 36

Multiple Choice

Which one of the following statements concerning the random walk hypothesis is correct?

• A) Random price movements support the weak form efficient markets hypothesis.
• B) Random price movements indicate that investors can earn abnormal profits on a routine basis.
• C) Share prices in general follow repetitive patterns but the actions of individual investors are random in nature.
• D) Share price movements are predictable but only over short periods of time.

---

Definitions:

Eurobanks

Banks that make loans and accept deposits in foreign currencies.

Foreign Currencies

Money or other forms of payment used in other countries, distinct from the domestic currency of the home country.

Arbitrage

The practice of taking advantage of price differences in different markets for the same asset, thus earning a profit without any risk.

Triangle Arbitrage

Triangle arbitrage is a risk-free trading strategy that takes advantage of price differences among three currencies in the foreign exchange market.