The term random walk is used in investments to refer to ________.
A) stock price changes that are random but predictable
B) stock prices that respond slowly to both old and new information
C) stock price changes that are random and unpredictable
D) stock prices changes that follow the pattern of past price changes

Question

Quizplus · Accepted Answer

A random walk in investments refers to stock price changes that are random and unpredictable. This means that stock prices cannot be predicted based on past price changes or any other factors, and follow no pattern. This idea is supported by the Efficient Market Hypothesis, which states that stock prices already incorporate all available information and therefore any attempt to consistently outperform the market is unlikely to be successful.

The Term Random Walk Is Used in Investments to Refer