SECTION 13.2 Summary

• A random walk is a nonrandom process for which its first differences are random.
• A random walk without drift is associated with an underlying zero mean change between successive observations, while a random walk with drift is associated with an underlying nonzero mean change between successive observations.
• For a random walk without drift, the best forecast is a naive forecast.
• The difference between two values in natural logarithmic units is a good approximation for percent change between the values in original units.