For most stocks, a scatter plot chart of stock returns versus past stock returns will appear as
A)a shotgun pattern centered close to the origin.
B)a random pattern mostly concentrated in the top-right and lower-left quadrants.
C)a random pattern mostly concentrated in the upper-left and upper-right quadrants.
D)None of the options.

Question

Quizplus · Accepted Answer

Stock returns versus past stock returns typically do not show a clear pattern or trend, resulting in a scatter plot that looks like a shotgun pattern, with points spread out but centered around the origin. This reflects the random walk hypothesis, which suggests that stock prices are unpredictable and follow a random path.

For Most Stocks, a Scatter Plot Chart of Stock Returns