Which of the Following Statements Is FALSE

question 102

Multiple Choice

Which of the following statements is FALSE?

• A)If some security were not part of the efficient portfolio,then every investor would want to own it,and demand for this security would increase causing its expected return to fall until it is no longer an attractive investment.
• B)The efficient portfolio,the portfolio that all investors should hold,must be the same portfolio as the market portfolio of all risky securities.
• C)Because every security is owned by someone,the sum of all investors' portfolios must equal the portfolio of all risky securities available in the market.
• D)If all investors demand the efficient portfolio,and since the supply of securities is the market portfolio,then two portfolios must coincide.

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Definitions:

Carrying Costs

Expenses associated with maintaining inventory, including storage, insurance, and spoilage costs.

Ordering Costs

Expenses incurred in placing and receiving orders for goods, including transportation, handling, and clerical costs.

Option Contract

A financial derivative that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price within a specified timeframe.

Futures Contract

A forward contract with the feature that gains and losses are realized each day rather than only on the settlement date.