Which of the following is true?
A)A random walk for share price changes is inconsistent with observed patterns in price
Changes.
B)If the share market follows a random walk, price changes should be highly correlated.
C)If the share market is weak form eﬃcient, then share prices follow a random walk.
D)All of the above.
E)Both B and C.

Question

Quizplus · Accepted Answer

The concept of weak form efficiency in the stock market posits that all past trading information is already reflected in stock prices, and thus, future price movements are independent of past movements. This is consistent with the idea of a random walk, where price changes are random and unpredictable based on past price movements. Choices A and B are incorrect because a random walk implies that price changes are not predictable and are uncorrelated with past changes, contrary to the assertions in A and B.

Which of the Following Is True