Some People Claim That Stocks Follow a Random Walk

question 28

Multiple Choice

Some people claim that stocks follow a random walk.What does this mean?

• A)The price of stock one day is about what it was on the previous day.
• B)Changes in stock prices cannot be predicted from available information.
• C)Stock prices are not determined by market fundamentals such as supply and demand.
• D)Prices of stocks of different firms in the same industry show no or little tendency to move together.

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Definitions:

Gentle Slopes

Slopes with a gradual incline, typically found in landscapes where erosion has smoothed the terrain over time.

Discontinuities

Interruptions or breaks in the physical continuity or uniformity of a geological structure, such as faults or joints.

Soluble Minerals

Soluble minerals are those that can dissolve in water, playing a crucial role in the geochemistry of groundwater and the formation of features like caves and sinkholes.

Weather Faster

The process of rocks and materials breaking down or dissolving more quickly due to exposure to the atmosphere, water, and biological organisms.