The Random Walk Theory Implies That Stock Prices

question 25

Multiple Choice

The random walk theory implies that stock prices

• A) go down, then up, and then down again.
• B) go up and then down in a predictable pattern.
• C) follow systematic trends.
• D) are unpredictable based on past trends.

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Definitions:

Neoclassical Models

Economic models that emphasize rationality, individual optimization, and equilibrium, focusing on how market mechanisms allocate resources efficiently.

Behavioral Economists

Researchers who study how psychological, emotional, and social factors affect economic decision-making.

Precise

Characterized by exactness and accuracy in expression or detail.

Evolutionary-developed

Pertains to characteristics, systems, or processes that have evolved over time through natural selection and adaptation.