One implication of the random walk hypothesis is
A)given the efficiency of foreign exchange markets,it is difficult to outperform the market-based forecasts unless the forecaster has access to private information that is not yet reflected in the current exchange rate.
B)given the efficiency of foreign exchange markets,it is difficult to outperform the market-based forecasts unless the forecaster has access to private information that is already reflected in the current exchange rate.
C)given the relative inefficiency of foreign exchange markets,it is difficult to outperform the technical forecasts unless the forecaster has access to private information that is not yet reflected in the current futures exchange rate.
D)none of the options

Question

Quizplus · Accepted Answer

The random walk hypothesis suggests that prices in financial markets reflect all publicly available information, meaning it is difficult for an investor or forecaster to outperform the market-based forecasts unless they have access to private information that is not yet reflected in the current exchange rate. Therefore, option A is the best choice as it accurately reflects the implications of the random walk hypothesis.

One Implication of the Random Walk Hypothesis Is