If stock prices follow a random walk,
A. speculation in the stock market destabilizes prices.
B. a stock’s past performance is not a good indicator of its future performance.
C. rumors, news, and other “signals” have no effect on stock prices.
D. the stock market does not participate in channeling resources toward firms with high stock prices.
Answer: B
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In the case of pure monopoly:
a. one firm is the sole producer of a good or service which has no close substitutes b. the firm's profit is maximized at the price and output combination where marginal cost equals marginal revenue c. the demand curve is always elastic d. a and b only e. a, b, and c
One motive for "battling the invisible hand" is
a. unhappiness about the prices that occur in free markets. b. envy toward those who apparently benefit from certain prices. c. a desire to have government "correct" some problems. d. an attempt to produce justice between buyers and sellers. e. All of the above are correct.