What Does It Mean to Say, "Stock Prices Follow a Random

question 13

Multiple Choice

What does it mean to say, "Stock prices follow a random walk?"

• A)Stock prices move haphazardly and, thus, are unpredictable.
• B)Differing transaction costs result in different signals for investors, so excess returns to investors are random.
• C)The stock market is both imperfect and inefficient.
• D)Stock prices move in response to new information, but new information enters the market randomly.

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Definitions:

Off-Peak Pricing

A pricing strategy that involves lowering prices during times of lower demand to encourage more usage or consumption.

Demand Variations

Fluctuations in consumer desire for a product or service over time, often influenced by factors like seasonality, price changes, and trends.

Off-Peak Pricing

is a pricing strategy where prices are lowered during times of less demand to encourage more consumption or use of a service.

Demand Variations

Refers to fluctuations in the market's desire for a product or service over time, often influenced by factors like seasonality, trends, and economic conditions.