If share prices appear to follow a random walk:
A) selecting shares for portfolios is irrelevant.
B) investment analysts are unimportant.
C) successive share price changes are unpredictable.
D) it is impossible to know when to buy shares.

Question

Quizplus · Accepted Answer

If share prices follow a random walk, it means that successive share price changes are unpredictable. This suggests that it is difficult to rely on historical data or forecast future prices. However, it doesn't necessarily mean that selecting shares for portfolios or investment analysis is irrelevant or unimportant, as other factors such as a company's financial performance can still be taken into consideration. It also doesn't mean that it is impossible to know when to buy shares, as market timing strategies can still be utilized.

If Share Prices Appear to Follow a Random Walk