Which of the Following Statements Is FALSE

question 6

Multiple Choice

Which of the following statements is FALSE?

• A)A short sale is a transaction in which you buy a stock that you do not own and then agree to sell that stock back in the future.
• B)The efficient portfolios are those portfolios offering the lowest possible level of volatility for a given level of expected return.
• C)A positive investment in a security can be referred to as a long position in the security.
• D)It is possible to invest a negative amount in a stock or security,which is called a negative position.

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Definitions:

Risky Asset

An asset that carries a significant possibility of losing some or all of its investment value.

Risk-free Asset

An investment that is expected to deliver guaranteed returns, with minimal to no risk of financial loss.

Arithmetic Average

The simple mean calculated by dividing the sum of a set of numbers by the quantity of numbers in the set.

Geometric Average

A method of calculating the average rate of return that accounts for compounding, often used for investment portfolios.