The Random Walk Theory Implies That Stock Prices

question 254

Multiple Choice

The random walk theory implies that stock prices

• A) go down, then up, and then down again.
• B) follow systematic trends.
• C) can be forecast accurately by experts who are knowledgeable about how the stock market works.
• D) will change as the result of unexpected factors that are virtually impossible to forecast accurately.

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Definitions:

Standard Cost System

A cost accounting system that estimates costs based on standard efficiency and material usage rates, then compares them with actual costs to identify variances.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost allocated, based on the actual activity levels.

Manufacturing Overhead

All manufacturing costs except direct materials and direct labor.

Standard Cost System

A cost accounting system that utilizes standard costs for material, labor, and overhead to estimate the cost of goods produced or services rendered.