- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 3. Market Efficiency
- Subject 2. Forms of Market Efficiency
CFA Practice Question
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.
Correct Answer: C
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. |