Which of the Following Is an Implication of the Random

question 110

Multiple Choice

Which of the following is an implication of the random walk theory?

• A) Experts will be able to make money by picking and choosing the best stocks.
• B) There is a systematic pattern to the movement of prices in the stock market.
• C) Stock market investors can expect to earn a fairly steady real rate of return of about 7 percent annually.
• D) Even experts will be unable to predict the future movement of stock prices with any degree of accuracy.

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Definitions:

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered by any current or future actions.

Unproductive

Refers to resources or activities that do not contribute to the output or efficiency of a process or operation.

Fixed Costs

Costs that do not change in total with changes in the volume of production or sales, such as rent, salaries, and insurance.

Relevant

Pertaining to something that is closely connected or appropriate to the matter at hand, especially in decision making or problem-solving.