Under the Concept of an Efficient Market a Random Walk

question 40

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 cannot be explained by expected return, can only be explained by the unexplained portion of price change in a prior period.

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