To Say That Stock Prices Follow a "Random Walk" Is

question 31

Multiple Choice

To say that stock prices follow a "random walk" is to argue that

• A) stock prices rise, then fall.
• B) stock prices rise, then fall in a predictable fashion.
• C) stock prices tend to follow trends.
• D) stock prices are, for all practical purposes, unpredictable.

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Definitions:

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of the entity, such as issuing shares or taking loans.

Investing Activities

transactions involving the purchase and sale of long-term assets and other investments, not related to core business operations.

Net Worth

The difference between the total assets and total liabilities of an individual or company, indicating financial health.

Financing Activities

Transactions involving changes in equity and long-term liabilities, reflecting how a company raises capital and repays investors.