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:

Hypoventilation

Insufficient ventilation leading to an increase in blood carbon dioxide levels and potential respiratory failure.

Irregular Pattern

A pattern that does not follow a predictable or orderly arrangement or sequence.

Fine Crackles

A type of lung sound heard on auscultation characterized by short, high-pitched, popping noises, indicative of various respiratory conditions.

Pneumothorax

The presence of air or gas in the cavity between the lungs and the chest wall, causing collapse of the lung.