Which of the Following Statements Is FALSE

question 22

Multiple Choice

Which of the following statements is FALSE?

• A)If alphas are indeed positive,it is possible that the positive alpha trading strategies contain risk that investors are unwilling to bear but the CAPM does not capture.
• B)If alphas are indeed positive,it is possible that the costs of implementing investment strategies are larger than the NPVs of undertaking them.
• C)If indeed alphas are positive,then investors have to be systematically ignoring negative-NPV investment opportunities.
• D)The only way a positive NPV investment opportunity can exist in a market is if some barrier to entry restricts competition.

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Definitions:

Gross Profit

Gross Profit is the financial metric representing the difference between revenue and the cost of goods sold (COGS), before deducting overheads, payroll, taxation, and interest payments.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made on a periodic basis, rather than continuously, often at the end of an accounting period.

Cost Of Goods Sold

The direct costs attributable to the production of goods sold by a company.

Merchandising Business

A merchandising business buys goods in their finished form for the purpose of resale without further processing, making profit through buying and selling activities.