If Stock Prices Follow a Random Walk,then Stock Investors Can

question 19

Multiple Choice

If stock prices follow a random walk,then stock investors can make large profits by

• A)buying stocks whose prices have been falling for several days.
• B)buying stocks whose prices have been rising for several days.
• C)performing fundamental analysis of stocks using data contained in annual reports.
• D)using inside information.

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Definitions:

Effort

The amount of physical or mental energy expended to achieve a task or goal.

Foundation of Competition

The underlying principles and conditions that drive rivalry among firms in an industry to achieve superiority.

Four-drive Theory

A motivational theory proposing that human beings are driven by the desires to acquire, bond, learn, and defend.

Esteem

Relates to the self-respect, self-worth, or regard that an individual has for themselves; can also refer to the admiration one receives from others.