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:

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Accounting treatment for purchase discounts where discounts are not considered until actually taken.

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