Which One of the Following Statements Concerning the Random Walk

question 76

Multiple Choice

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

• A) Stock price movements are predictable but only over short periods of time.
• B) Stock prices respond to new information.
• C) Stock prices in general follow repetitive patterns but the actions of individual investors are random in nature.
• D) Random price movements indicate that investors can earn abnormal profits on a routine basis.

---

Definitions:

Shares Sold

The quantity of individual stocks that have been purchased by investors and are on the market.

Convertible Preferred Stock

A type of preferred stock that holders can convert into a specified number of common stock shares, usually at any time after a predetermined date.

Common Stock

Shares of ownership in a corporation, giving holders voting rights and a portion of the profits through dividends.

Dividend

A portion of a company's earnings distributed to its shareholders, typically paid regularly (e.g., quarterly).