The Model, P_t = P_t-1 + Expected Return + Random

question 29

Multiple Choice

The model, P_t = P_t-1 + Expected Return + Random errors, supports the weak form of the efficient market hypothesis if:

• A) the random error can be predicted by past prices.
• B) there is correlation between random errors period to period.
• C) the random errors are unrelated from one period to the next period.
• D) the expected return is not based on the security's risk.

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