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The Statement That Stock Prices Follow a Random Walk Implies

question 32

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 or -1


Definitions:

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Intangible Assets

Intangible assets are non-physical assets owned by a business, such as patents, trademarks, goodwill, and licensing agreements, known for their long-term value.

Long-Term Debt

Loans and financial obligations lasting over one year that are used to finance a company's operations.

Book Value

The value of an asset according to its balance sheet account balance, subtracting any liabilities or depreciation.

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