If the prices of financial assets follow a random walk, then

Question

Quizplus · Accepted Answer

If financial asset prices follow a random walk, then the change in price from one trading period to the next is not predictable. This means that no past information about the price or performance of the asset can help predict its future price movements. Therefore, option C is the correct choice. Options A and B are incorrect because they suggest that the prices of financial assets should be easy to forecast, which is not the case if they follow a random walk. Option D is incorrect because it assumes that major traders in the market are not making use of all available information, which may not necessarily be true.

If the Prices of Financial Assets Follow a Random Walk