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The random walk theory states...

A. On any given day, stock prices are just as likely to rise as to fall.

B. That the best way to forecast the direction of a stock price is to use a random
number generator.

C. That predicting the future price of a stock is randomly going to change, and the change is unknown.

D.Random events will determine the future of a stock price, and the price will take
larger decreases than increases.

User Beefaroni
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1 Answer

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Answer: The correct answer is C.

Step-by-step explanation:

The random walk theory states that predicting the future price of a stock is randomly going to change, and the change is unknown. Therefore, option C is the correct answer.

The theory suggests that stock prices reflect all available information and that changes in stock prices occur randomly and cannot be predicted based on past trends or events. This means that on any given day, stock prices are just as likely to rise as to fall, as mentioned in option A, but this is not the primary statement of the theory. Option B is not accurate because it suggests that a random number generator is the best way to forecast the direction of a stock price, which is not true. Finally, option D is also incorrect because the theory does not suggest that stock prices will take larger decreases than increases based on random events.

User David Calhoun
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