If a Share Price Falls on Four Consecutive Days of Trading,share

question 94

Multiple Choice

If a share price falls on four consecutive days of trading,share prices:

• A) cannot be following a random walk
• B) can still be following a random walk
• C) are almost certain to decrease the next day
• D) are almost certain to increase the next day

---

Definitions:

Risk-Averse

The characteristic of preferring to avoid risk, opting for lower but more certain returns over potential higher but uncertain returns.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Marginal Utility Curve

A graphical representation showing how marginal utility depends on the quantity of the good or service consumed.

Risk Aversion

The tendency of individuals to prefer outcomes that are certain or less risky over outcomes that are uncertain, even if the uncertain outcomes might offer a greater expected return.