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:

Industry

A group of companies that produce similar products or services, often characterized by shared markets, competition, and regulations.

Industry Concentration Ratio

A measure used to determine the extent of market control held by the largest companies within an industry, often indicating the level of competition.

Perfect Competition

A market structure where many firms sell identical products, entry and exit to the market are easy, and no single firm can influence the market price.

Medium-sized Firms

Companies that occupy the middle ground in terms of annual revenues and employee numbers, larger than small businesses but smaller than large corporations.