When the term random walk is used about stock prices, it means that:

a. buying high-priced stocks ensures a high return.
b. prices are as likely to rise as to fall on any given day.
c. prices tend to fall by greater amounts than they rise.
d. stocks are a slow and boring way to make money.

b. prices are as likely to rise as to fall on any given day.

Because stock prices will shift in response to unpredictable future news, these prices will tend to follow what mathematicians call a “random walk with a trend.” The “random walk” part means that, on any given day, stock prices are just as likely to rise as to fall. “With a trend” means that over time, the upward steps tend to be larger than the downward steps, so stocks do gradually climb.