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:

Profit And Loss Statement

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period, reflecting the company's profit or loss.

Break-Even Point

The point at which total costs equal total revenues, indicating that a business is neither making a profit nor incurring a loss.

Sales Mix

The combination of different products or services that a company sells, impacting its overall profitability and performance.

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income.