- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 5. Time-Series Analysis
- Subject 3. Random Walks
CFA Practice Question
A time-series is considered a random walk if:
A. It exhibits a clear trend over time.
B. Future values are completely predictable.
C. Changes from one period to the next are random and unpredictable.
D. It follows a linear regression model.
Correct Answer: C
The best prediction for tomorrow is the best value today plus a random error term.
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