If You Believe That Stock Market Prices Follow a Random

question 59

Multiple Choice

If you believe that stock market prices follow a random walk,then:

• A) historical price information provides no benefit in predicting future prices.
• B) there is no financial benefit from investing in the stock market.
• C) having inside information will not lead to excess profits.
• D) studying past price movements will lead to excess profits.
• E) you also believe the market is strong-form efficient.

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Definitions:

Materials Price Variance

A measure of the difference between the actual cost of materials and the expected cost at standard prices.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together.

Standards

Established criteria or benchmarks against which performance, quality, and compliance are measured.