Question

Please define the financial meaning of the word interest and the non-financial meaning of the word interest.

Please explain the Random Walk theory.

Answer 1

The financial meaning of the word interest is the money payed regularly at a for the particular rate for the use of money lent or for delaying the repayment of a loan.

Non financial meaning of interest is the feeling to know something or learn about something

Explanation:

random walk theory is a financial theory stating how stock market prices evolve according to random walk hence cannot be predicted,random walk theory believes that its impossible to outperform the market without additional risk,this theory believes that investment advisers add little or no value to investors idea.

The theory suggests that future price of each stock is independent on its own historical movement.Buying alot of shares from a company with the hope of selling it at a higher prices in 10years but the prices margically falls after that period of 10years lapses is an example of a random walk theory