Security Prices Are Said to Follow a "Random Walk," Which

question 85

Multiple Choice

Security prices are said to follow a "random walk," which means that:

• A)stock selection for portfolio composition is unimportant.
• B)it is impossible to know whether stocks offer higher returns than bonds.
• C)investment analysts are unnecessary.
• D)successive price changes are unpredictable.

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Definitions:

Fixed Overhead Costs

Expenses that do not change with the level of output within a certain range of activity, such as rent, salaries, and insurance.

Variable Costs

Expenses that fluctuate in unison with the amount of production or the quantity of goods produced.

Sales Volume Variance

A measure used in variance analysis to assess the difference between the actual units sold and the budgeted sales volume, impacting revenue.

Actual Sales Volume

The real number of units sold or services provided by a business during a specific period, as opposed to forecasted or planned sales volumes.