The theory that states that daily stock price changes are independent and identically distributed is
A) semi-strong efficient.
B) efficient.
C) random walk.
D) weak efficient.

Question

Quizplus · Accepted Answer

The theory that daily stock price changes are independent and identically distributed is known as the random walk theory. This theory suggests that future stock prices cannot be predicted based on historical stock prices, and that daily stock price movements are purely random and unpredictable. This view is consistent with the weak form of the efficient market hypothesis, which states that all past price information is already reflected in current stock prices. Therefore, the correct answer is C) random walk.

The Theory That States That Daily Stock Price Changes Are