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Basic Question 5 of 14
A "random walk" occurs when ______
B. stock prices respond slowly to both new and old information.
C. future price changes are uncorrelated with past price changes.
D. past information is useful in predicting future prices.
A. stock price changes are random but predictable.
B. stock prices respond slowly to both new and old information.
C. future price changes are uncorrelated with past price changes.
D. past information is useful in predicting future prices.
User Contributed Comments 4
| User | Comment |
|---|---|
| kalps | Random walk - future stock prices are uncorrelated to past prices |
| ljamieson | Markov process, like Brownian motion |
| SKIA | Random walk down wall st. - Malkiel |
| Shaan23 | No SKIA. That is correlated. You writing the CFA exam and walking down wall street. |
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Learning Outcome Statements
contrast weak-form, semi-strong-form, and strong-form market efficiency
explain the implications of each form of market efficiency for fundamental analysis, technical analysis, and the choice between active and passive portfolio management
CFA® 2025 Level I Curriculum, Volume 3, Module 3.