If market participants rely only on past stock prices to forecast future stock prices

Question

Quizplus · Accepted Answer

Market participants with adaptive expectations rely solely on past stock prices to forecast future prices. However, this approach assumes that future stock prices will follow the same pattern as past prices, which may not always be the case. Additionally, this approach may not provide accurate predictions during periods of market changes or events that impact the stock's value.

If Market Participants Rely Only on Past Stock Prices to Forecast