The Random Walk Theory of Stock Prices Indicates That

question 345

Multiple Choice

The random walk theory of stock prices indicates that

• A) if they are willing to do a little research, even beginning investors will be able to pick the stocks that will increase most in price in the future.
• B) managed mutual funds will persistently earn a higher rate of return than indexed funds.
• C) current stock prices already reflect information about factors influencing future stock prices that can be forecast with any degree of accuracy.
• D) stock market investors can expect to earn a steady real rate of return of about 7 percent annually.

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Definitions:

Murray's Manifest Needs Theory

A psychological theory proposed by Henry Murray, which describes human motivation in terms of underlying psychological needs.

Desire for Independence

The intrinsic motivation or drive of individuals to control their own actions, make independent decisions, and be self-reliant.

Need For Autonomy

An individual's desire for self-direction and the freedom to make their own choices.

Herzberg's Theory

A motivation theory, also known as the Two-Factor Theory, suggesting that certain factors in the workplace lead to job satisfaction, while others lead to dissatisfaction.