Question

is the random walk theory empirically plausible? explain.

include definitions of each

Answer 1

Random walk theory = The theory states that changes in stock prices have the same distribution and they are independent from each other

Therefore here the past activities or the movement of the stock prices and stock markets cannot be used to predict the future activities or movements. They are unpredictable

The random walk theory is emperically plausible ( reasonable ) for the starters or the first time investor because this Theory states that these past stocks are random and cannot be predict the future prices.