The Statement That Stock Prices Follow a Random Walk Implies

question 22

Multiple Choice

The statement that stock prices follow a random walk implies that:
I. The correlation coefficient between successive price changes (auto correlation) is not significantly different from zero.
II. Successive price changes are positively related.
III. Successive price changes are negatively related.
IV. The autocorrelation coefficient is positive.

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

---

Definitions:

Vascular

Relating to the body's blood vessels and the circulation of blood throughout the body.

Mitochondrion

An organelle found in large numbers in most cells, in which the biochemical processes of respiration and energy production occur.

Cytoplasm

Cellular matter, not including the nucleus of a cell.

Sciatica

Inflammation and pain along the sciatic nerve felt at the back of the thigh running down the inside of the leg.