Download PDF More Formats on IMF eLibrary Order a Print Copy Create Citation This paper addresses a key puzzle in international finance: whether exchange rates follow a random walk or exhibit ...

Two versions of the random walk hypothesis are identified: the price version in which future prices are hypothesized to be independent of past price movements; and the history version in which future ...

Random walk theory proposes that stock prices move unpredictably, making it impossible to predict future movements based solely on past trends. This financial theory, first popularized by economist ...