For most stocks, a scatter plot chart of stock returns versus past stock returns will appear as
A)a shotgun pattern centered close to the origin.
B)a random pattern mostly concentrated in the top-right and lower-left quadrants.
C)a random pattern mostly concentrated in the upper-left and upper-right quadrants.
D)None of the options are correct.

Question

Quizplus · Accepted Answer

Most stocks exhibit a random pattern of returns over time, which means that past returns do not predict future returns. This results in a scatter plot that looks like a shotgun pattern centered around the origin, indicating no clear trend or correlation.

For Most Stocks, a Scatter Plot Chart of Stock Returns