Under the Concept of an Efficient Market, a Random Walk

question 43

Multiple Choice

Under the concept of an efficient market, a random walk in stock prices means that:

• A)there is no driving force behind price changes.
• B)technical analysts can predict future price movements to earn excess returns.
• C)the unexplained portion of price change in one period is unrelated to the unexplained portion of price change in any other period.
• D)the unexplained portion of price change in one period that can not be explained by expected return can only be explained by the unexplained portion of price change in a prior period.
• E)None of the above.

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Definitions:

Implicit Premise

An underlying assumption that is not explicitly stated but is necessary for an argument's conclusion to be valid.

Implicit Premises

Unstated assumptions that are necessary for an argument to hold together logically, but are not explicitly mentioned.

Explicit Information

Details or facts that are clearly and directly expressed or stated, without the need for inference.

Mathematicians

Professionals or scholars who specialize in the study of mathematics, exploring concepts such as numbers, abstract symbols, and their relationships.