Which of the Following Statements Is FALSE

question 108

Multiple Choice

Which of the following statements is FALSE?

• A)An investor's preferences will determine only how much to invest in the tangent or efficient portfolio versus the risk-free investment.
• B)Conservative investors will invest a small amount in the tangent or efficient portfolio,choosing a portfolio on the line near the risk-free investment.
• C)Only aggressive investors will choose to hold the portfolio of risky assets,the tangent or efficient portfolio.
• D)Aggressive investors will invest more in the tangent portfolio choosing a portfolio that is near the tangent portfolio or even beyond it by buying stocks on margin.

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Definitions:

Normal Balance

The side (debit or credit) of an account that is increased. For assets and expenses, it is the debit side; for liabilities, equity, and revenues, it is the credit side.

Financial Statement

A financial statement is a formal record of the financial activities and position of a business, person, or other entity, detailing earnings, expenditures, assets, liabilities, and equity at a specific point in time.

Permanent/Temporary

Classification of accounts where permanent accounts represent balance sheet items carried over multiple periods, and temporary accounts are income statement items closed at the end of each period.

Normal Balance

The side of an account (debit or credit) on which increases to the account are recorded, determined by the account type.