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According to the Efficient Markets Hypothesis, Stocks Follow a Random

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According to the efficient markets hypothesis, stocks follow a random walk so that stocks that increase in price one year are more likely to increase than decrease in the next year.


Definitions:

Divergent Thinking

A cognitive strategy employed to develop original concepts by investigating a wide range of potential solutions.

Inductive Reasoning

A rational approach where a number of premises, believed to be true or usually true, are amalgamated to achieve a certain conclusion.

Mental Age

A measure of an individual's cognitive development based on the age at which typical individuals achieve a certain level of intellectual performance.

Chronological Age

The actual age of a person or thing as measured in years from the date of birth or creation.

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