If stock prices follow a random walk
A) it implies that investors are irrational.
B) it means that the market cannot be efficient.
C) price levels are random.
D) price changes are random.
E) price movements are predictable.

Question

Quizplus · Accepted Answer

If stock prices follow a random walk, it means that price changes are random and unpredictable. This does not necessarily imply that investors are irrational or that the market cannot be efficient. It suggests that current prices already reflect all available information, making it difficult to predict future price movements.

If Stock Prices Follow a Random Walk