Economic and stock market analysts use the random walk hypothesis to model patterns of share prices on the stock market, including commodity prices and currency exchange rates. This practice presumes that investors will act rationally and without bias, projecting an asset’s value based on future expectations. All the current information affects the price per share, […]


Economic and stock market analysts use the random walk hypothesis to model patterns of share prices on the stock market, including commodity prices and currency exchange rates. This practice presumes that investors will act rationally and without bias, projecting an asset’s value based on future expectations. All the current information affects the price per share, which can only change when new data becomes available. Since new information appears randomly, it can be assumed that the price for a share is influenced randomly.