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3) Which of the following describes a random walk? (10 pts) Stock price changes are random but predictable. Stock prices respond slowly to both new
3) Which of the following describes a "random walk"? (10 pts) Stock price changes are random but predictable. Stock prices respond slowly to both new and old information Future price changes are uncorrelated with past price changes Past information is useful in predicting future prices Stocks can't follow a random walk because stocks have a positive risk premium where prices in the distant future are sure to be higher than current prices
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