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Since stock prices will shift in response to unpredictable future news, these prices will tend to follow what mathematicians call _________________.

User Jonasm
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Answer:

a random walk with a trend

Step-by-step explanation:

This model assumes that in each period the stock prices would take a random step away from what was its previous value.

Stock prices cannot be predicted therefore they are a random walk. Future prices cannot be predicted by what used to be the prices in the past. Stock prices change in response to unpredictable future news, hence they follow a random walk with a trend.

User Nadeem Khan
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