Which of the Following Statements About the Mutual-Fund Theorem Is

question 29

Multiple Choice

Which of the following statements about the mutual-fund theorem is true? I) It is similar to the separation property.
II) It implies that a passive investment strategy can be efficient.
III) It implies that efficient portfolios can be formed only through active strategies.
IV) It means that professional managers have superior security-selection strategies.

• A)I and IV
• B)I, II, and IV
• C)I and II
• D)III and IV

---

Definitions:

Banded Rock

Rock that displays layers or bands of different colors or textures, often resulting from varying mineral compositions or sediment deposition.

Coarse Crystals

Large, visible crystals often found in igneous rocks, indicating slow cooling of magma.

Foliation

Foliation is the repetitive layering in metamorphic rocks, caused by the reorientation of minerals under high pressure and temperature conditions.

Cross Section

A diagram representing the geology as a two-dimensional slice through the land. See also geologic cross section.