alexdonatalex6617 alexdonatalex6617
  • 31-07-2020
  • Business
contestada

Since stock prices will shift in response to unpredictable future news, these prices will tend to follow what mathematicians call _________________.

Respuesta :

ogorwyne
ogorwyne ogorwyne
  • 03-08-2020

Answer:

a random walk with a trend

Explanation:

This model assumes that in each period the stock prices would take a random step away from what was its previous value.

Stock prices cannot be predicted therefore they are a random walk. Future prices cannot be predicted by what used to be the prices in the past. Stock prices change in response to unpredictable future news, hence they follow a random walk with a trend.

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