Which of the Following Statements Is FALSE

question 127

Multiple Choice

Which of the following statements is FALSE?

• A)The Sharpe ratio of the portfolio tells us how much our expected return will increase for a given increase in volatility.
• B)We should continue to trade securities until the expected return of each security equals its required return.
• C)The required return is the expected return that is necessary to compensate for the risk that an investment will contribute to the portfolio.
• D)If security i's required return exceeds its expected return,then adding more of it will improve the performance of the portfolio.

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Definitions:

Rural India

Refers to the countryside areas of India, often characterized by agricultural practices, lower population density, and less access to infrastructure and technology than urban areas.

Efficient Markets

Markets in which all available information is fully reflected in asset prices, making it impossible to consistently achieve higher returns than the overall market.

Opportunity Cost

The cost of foregone alternatives, representing the benefits that could have been received by choosing the next best alternative.

Retail Value

The price at which a product is sold to the end consumer, typically including markups from wholesale or manufacturing costs.