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:

Bank Statement

A document or electronic record issued by a bank detailing the transactions in a customer's account over a specific period.

Oral Stop Payment Order

A verbal instruction to a financial institution to not pay out or process a specific check or transaction.

Electronic Fund Systems

Systems that enable the electronic transfer of money from one bank account to another without the direct involvement of bank staff.

Automated Teller Machines

Electronic banking outlets that allow customers to complete transactions without the need for a branch representative.