Which of the Following Statements Is FALSE

question 41

Multiple Choice

Which of the following statements is FALSE?

• A)To improve the performance of their portfolios,investors who are holding the market portfolio will compare the expected return of each security with its required return from the security market line.
• B)The Sharpe ratio of a portfolio will increase if we sell stocks with positive alphas.
• C)When a stock's alpha is not zero,investors can improve upon the performance of the market portfolio.
• D)When the market portfolio is efficient,all stocks are on the security market line and have an alpha of zero.

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Definitions:

Loner

An individual who prefers to be alone rather than with others, often by personal choice or as a result of social anxiety or other factors.

Cold

Relates to lower temperatures or a common viral infection causing respiratory symptoms, depending on context; not typically a psychological term.

Hypersensitivity

An exaggerated or heightened response to stimuli, which can be physical, such as in allergies, or emotional, such as in mental health disorders.

Negative Evaluations

The process of critically assessing something in a manner that highlights its faults or shortcomings.