Which of the Following Statements Is FALSE

question 51

Multiple Choice

Which of the following statements is FALSE?

• A)When stocks are perfectly positively correlated,the set of portfolios is identified graphically by a straight line between them.
• B)An investor seeking high returns and low volatility should only invest in an efficient portfolio.
• C)When the correlation between securities is less than 1,the volatility of the portfolio is reduced due to diversification.
• D)Efficient portfolios can be easily ranked,because investors will choose from among those with the highest expected returns.

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Definitions:

Semi-Annual

Semi-Annual refers to something occurring or done twice a year, typically every six months.

Coupon Bond

A bond that pays the holder a fixed interest payment (coupon) at regular intervals until the maturity date, when the principal and final interest payment are repaid.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, taking into account its current market price, face value, interest rate, and time to maturity.

Par Value

Is the face value of a bond or stock, representing the amount that will be returned to the investor at maturity or the value at which the stock is noted on the balance sheet.