Since Stock Prices Will Shift in Response to Unpredictable Future

question 16

Multiple Choice

Since stock prices will shift in response to unpredictable future news, these prices will tend to follow what mathematicians call _________________.

• A) a random walk with a trend
• B) momentum trading
• C) long-term fundamental value
• D) unpredictable changes in expectations

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Definitions:

Net Income

The final amount a company earns, which is the total revenue minus all expenses, taxes, and costs.

Net Loss

The amount by which expenses exceed revenues in a given period, resulting in a decrease in equity.

Debits And Credits

Accounting entries that are used to record transactions, where debits increase asset or expense accounts and decrease liability, equity, and revenue accounts, while credits do the opposite.

Income Statement

A financial statement that reports a company's financial performance over a specific period, detailing revenues, expenses, and net income.