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Many financial economists believe that the random walk model is a good description of the logarithm of stock prices. It implies that the percentage changes
Many financial economists believe that the random walk model is a good description of the logarithm of stock prices. It implies that the percentage changes in stock prices are unforecastable. i) What do YOU think? Are stock prices indeed unforecastable? ii) Assume that they are indeed unforcastable. What implications does this have for the financial markets?
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