The random walk theory suggests that
A)all stocks have an expected return of zero.
B)stock price changes are random.
C)stock prices are random.
D)diversification is pointless.

Question

Quizplus · Accepted Answer

The random walk theory suggests that stock price changes are random and unpredictable, meaning that past movement or patterns cannot be used to predict future movement. However, this does not mean that all stocks have an expected return of zero or that diversification is pointless.

The Random Walk Theory Suggests That