If stock prices follow a random walk, which of the following statement(s) is(are) correct?
A)Successive stock price changes are not related
B)The history of stock prices cannot be used to predict future returns to investors
C)Both A and B
D)Neither A nor B

Question

Quizplus · Accepted Answer

The theory of random walk suggests that stock prices change randomly and successively, and that the past history of stock prices cannot be used to predict future returns. Therefore, both A and B statements are correct.

If Stock Prices Follow a Random Walk, Which of the Following