If share prices follow a random walk then investors can make large profits illegally by
A) using computer programs that perform technical analysis using past share price trends.
B) performing fundamental analysis of shares using data contained in annual reports.
C) quickly responding to rumours of mergers between companies.
D) using insider information.

Question

Quizplus · Accepted Answer

If share prices follow a random walk, then the only way investors can make large profits illegally is by using insider information, which is illegal and unethical. The other options - technical analysis, fundamental analysis, and responding to rumors - are legitimate investment strategies that may or may not be effective in generating profits in a random walk market.

If Share Prices Follow a Random Walk Then Investors Can