If Stock Prices Follow a Random Walk

question 136

Multiple Choice

If stock prices follow a random walk,

• A)speculation in the stock market destabilizes prices.
• B)a stock's past performance is not a good indicator of its future performance.
• C)rumors, news, and other "signals" have no effect on stock prices.
• D)the stock market does not participate in channeling resources toward firms with high stock prices.

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Definitions:

Application Software

Computer software designed to perform a group of coordinated functions, tasks, or activities for the benefit of the user.

Computer System

An electronic device capable of executing a series of instructions to process data.

Virus

A biological infectious agent that replicates only inside the living cells of an organism, potentially causing disease.

Dormant

A state of inactivity or minimal activity, often used to describe a business that is not currently active but still exists legally.