Which of the Following Statements Is FALSE

question 27

Multiple Choice

Which of the following statements is FALSE?

• A)We can improve the performance of our portfolio by selling stocks with negative alphas.
• B)The market portfolio is on the SML,and according to the CAPM,since all other portfolios are inefficient,they will not fall on the SML.
• C)The difference between a stock's expected return and its required return according to the security market line is called the stock's alpha.
• D)The risk premium for any security is proportional to its beta with the market.

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Definitions:

Contrapositive

A logical statement derived by negating and swapping the hypothesis and conclusion of the original conditional statement. If the original statement is "If P, then Q," the contrapositive is "If not Q, then not P."

Hypothetical Proposition

A proposition or statement that is based on a hypothesis or an assumption rather than on known facts.

Antecedent

The “if” component in a hypothetical proposition.

Hypothetical Proposition

An assumption or proposition made for the sake of argument that explores consequences of its being true, regardless of its actual truth value.