What does "random walk" mean? According to the efficient markets hypothesis, should stock prices follow a random walk?
A random walk means the path of a variable is impossible to predict. According to the efficient markets hypothesis stock prices should follow a random walk because they reflect all publicly available information.
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Explain the relationship between the correlation of payoffs and the risk reducing effects of diversification and hedging.
What will be an ideal response?
If the interest rate rises, the
a. quantity of loanable funds demanded by firms decreases b. quantity of loanable funds demanded by government decreases c. quantity of loanable funds demanded by firms increases d. quantity of loanable funds demanded by government increases e. demand for loanable funds curve shifts to the right
The relative concept of poverty is based on how far a family falls behind the
a. average family income. b. top 20 percent of families. c. minimum in wages. d. any of the above.
Wealth is redistributed from creditors to debtors when inflation was expected to be
a. high and it turns out to be high. b. low and it turns out to be low. c. low and it turns out to be high. d. high and it turns out to be low.