The Random Walk Theory Indicates That

question 365

Multiple Choice

The random walk theory indicates that

• A) investors can make money by purchasing stocks that are widely expected to earn substantial profits in the future.
• B) while changes in the prices of specific stocks are difficult to predict, experts are able to forecast the future direction of broad stock market indexes with a high degree of accuracy.
• C) changes in stock prices are driven by surprise occurrences that are difficult for anyone to predict accurately.
• D) managed mutual funds will persistently outperform indexed funds.

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Definitions:

Korsakoff's Syndrome

A chronic memory disorder often caused by severe deficiency of thiamine, typically associated with long-term alcohol misuse.

Ethyl Alcohol

A volatile, flammable, colorless liquid commonly used as the principle ingredient in alcoholic beverages.

Blood Alcohol Concentration

The percentage of alcohol in a person's bloodstream, used to legally define intoxication for purposes such as driving under the influence.

Delirium Tremens

A severe form of alcohol withdrawal characterized by sudden and severe mental or neurological changes, including confusion, tremors, and hallucinations.