The random walk theory indicates that
A) investors can make money by purchasing stocks that are widely expected to earn substantial profits in the future.
B) while changes in the prices of specific stocks are difficult to predict, experts are able to forecast the future direction of broad stock market indexes with a high degree of accuracy.
C) changes in stock prices are driven by surprise occurrences that are difficult for anyone to predict accurately.
D) managed mutual funds will persistently outperform indexed funds.

Question

Quizplus · Accepted Answer

The random walk theory suggests that stock prices change randomly and are influenced by unpredictable events, making it difficult to forecast future price movements accurately.

The Random Walk Theory Indicates That