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Financial Planner

Category - Investment Planning

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True or false: Behind the random walk model, the current price is the best prediction of future prices.

True
False

Explanation

Answer: A - With the random walk model, current price is the best prediction of future prices. The random walk model states that asset prices are unpredictable and that the current price is the best prediction of future price.

For further reading, we recommend Burton Malkiel’s 1973 book, A Random Walk Down Wall

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