Q178
The random walk hypothesis is most related to the___________.
A.
weak-form EMH
AnswerB.
semi strong-form EMH
C.
semi weak-form EMH
D.
strong-form EMH
Answer: Option A
Solution
Answer: Option A
Solution:
The random walk hypothesis is most related to the weak-form EMH. Weak form efficiency, also known as the random walk theory, states that future securities' prices are random and not influenced by past events. Advocates of weak form efficiency believe all current information is reflected in stock prices and past information has no relationship with current market prices.