Which of the Following Statements Is FALSE

question 78

Multiple Choice

Which of the following statements is FALSE?

• A)Short-term margin loans from a broker are often 1% to 2% lower than the rates paid on short-term Treasury securities.
• B)In the real world,investors have different information and expectations regarding securities.
• C)The SML is still valid when interest rates differ.
• D)When borrowing and lending occur at different rates there are different tangent portfolios identified.

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Definitions:

Closed Markets

refer to markets that are not open to all, often restricted by trade barriers or regulations, limiting the entry of external players.

Trading Position

A trading position is the stance an investor takes on the expected future performance of a financial instrument, reflected through either holding or trading the instrument.

Rate of Return

The gain or loss on an investment over a specified time period, expressed as a percentage of the investment's cost.

Invested

The act of allocating resources, typically money, into something with the expectation of generating income or profit, such as stocks, bonds, real estate, or a business venture.