In: Economics
QUESTION 36 In the pipeline theory, inventories are held as part of a production process. True False
QUESTION 37 As a result of anticipated information, stock prices follow a random walk. True False
QUESTION 38 The return on the savings account is R × ps; the return on the stock is the dividend plus the capital gains, Δps. True False
please answer all true and false questions plz
In the pipeline theory, inventories are held as part of a production process. FALSE In pipeline theory, the inventories are considered to be in transit or shipping. Not in the production process.
As a result of anticipated information, stock prices follow a random walk. TRUE
Random walk theory states that stock price movements are independent of each other. SO the past movement cannot be used to predict future movement. So stocks take a random path which is unpredictable and so predicting prices are futile in the long run.
The return on the savings account is R × ps; the return on the stock is the dividend plus the capital gains, Δps. TRUE The return on a stock is 2 fold with dividend and capital gains when sold. For the savings account, it is only the interest income.
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