Question

Which one of the following terms is used to describe a stock price that moves over time creating no discernible pattern?

a. efficient movement
b. deviated pattern
c. dispersed flow
d. overreaction and correction
e. random walk

Answer 1

A stock price that moves over time creating no discernible pattern is known as a random walk.

Step-by-step explanation:

In finance and investing, a stock price that moves over time creating no discernible pattern is known as a random walk. This term is used by mathematicians and financial professionals to describe the unpredictable nature of stock price movements.

In a random walk, stock prices are just as likely to rise as to fall on any given day, and over time, the upward steps tend to be larger than the downward steps, resulting in gradual growth.

This concept of random walk implies that no one can consistently predict the future movements of stock prices, making it difficult to beat the average consistently.