If a Stock Price Follows a Markov Process Which of the Following

question 3

Multiple Choice

If a stock price follows a Markov process which of the following could be true

• A) Whenever the stock price has gone up for four successive days it has a 70% chance of going up on the fifth day.
• B) Whenever the stock price has gone up for four successive days there is almost certain to be a correction on the fifth day.
• C) The way the stock price moves on a day is unaffected by how it moved on the previous four days.
• D) Bad years for stock price returns are usually followed by good years.

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Definitions:

Rats

Often used in psychology experiments as subjects for studying behavior, learning, and neurological processes.

Chimpanzees

A species of great ape known for its intelligence and complex social behaviors, often studied to gain insights into human evolution and behavior.

Unconscious Influences

Factors operating below an individual's level of conscious awareness that can affect thoughts, feelings, and behaviors.

Traits

Enduring characteristics or tendencies that influence behavior across various situations and over time.