Under the Concept of an Efficient Market, a Random Walk

question 21

Multiple Choice

Under the concept of an efficient market, a random walk in stock prices means that:

• A)there is no driving force behind price changes.
• B)technical analysts can predict future price movements to earn excess returns.
• C)the unexplained portion of price change in one period is unrelated to the unexplained
• Portion of price change in any other period.
• D)the unexplained portion of price change in one period that can not be explained by
• Expected return can only be explained by the unexplained portion of price change in a
• Prior period.
• E)None of the above.

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Definitions:

Society Rules

Set of norms, laws, and guidelines by which a society operates, influencing the behavior and interactions of its members.

Priest

refers to a religious leader authorized to perform sacred rituals of a religion, acting as a mediator between humans and one or more deities.

Evil Spirits

supernatural entities believed in many cultures to be responsible for harm or misfortune.

Demonology

The belief that abnormal behavior results from supernatural causes such as evil spirits.