One of the Theories on the Determination Of,and Change in the Value

question 65

Multiple Choice

One of the theories on the determination of,and change in the value of,shares and other securities is the random walk hypothesis.Which of the following statements in relation to the random walk hypothesis is correct?

• A) The trend of new information into the market may be consistently good or consistently bad over time.
• B) If the price of a share rose in one period, there is a higher probability that it will rise again in the next period.
• C) Share price reflects the share's intrinsic value, based on the latest information set relevant to current and future prospects.
• D) The history of previous price movements contains valuable information on likely future price movements.

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Definitions:

Self-report Questionnaire

A method of data collection in which individuals provide responses to questions posed by researchers, typically regarding their behavior, thoughts, or feelings.

Behavioral Inhibition System

A neurobiological system that regulates response to stimuli which signal punishment, non-reward, or novel situations.

Gray's Reinforcement Sensitivity Theory

A theory in psychology that explains human personality and behavior through systems controlling responses to reward and punishment.

Environmental Punishment

A consequence resulting from the natural consequences of an action, rather than a direct intervention from another party.