If the Random Walk Theory Is Correct, Prudent Investors Could

question 140

Multiple Choice

If the random walk theory is correct, prudent investors could choose their stock portfolio by

• A)throwing darts at the newspaper's financial page.
• B)spending money to consult a stock forecaster.
• C)spending time analyzing past stock performance.
• D)not investing in stocks at all since price behavior is completely erratic.

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Definitions:

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board for global use.

Perpetual

A method of inventory management where updates are made continuously as transactions occur.

Income Summary

An account used during the closing process that summarizes revenues and expenses for a specific accounting period before the net income or loss is transferred to retained earnings.

Inventory

Items meant for sale during regular business operations, currently being produced for that purpose, or intended as materials to be used in manufacturing.