Which of the Following Statements Is FALSE

question 32

Multiple Choice

Which of the following statements is FALSE?

• A)Because of the higher and uncompensated risk involved,no investor should choose a portfolio with a negative alpha.
• B)Because the average portfolio of all investors is the market portfolio,the average alpha for all investors is zero.
• C)The market portfolio can be inefficient if a significant number of investors misinterpret information and believe they are earning a positive alpha when they are actually earning a negative alpha.
• D)If no investor earns a positive alpha,then no investor can earn a negative alpha,and the market portfolio must be efficient.

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Definitions:

Seven Stages

A hypothetical framework suggesting a sequence of phases that one might go through when dealing with a process or overcoming a challenge.

Driving Forces

Factors that motivate or influence individuals or organizations towards achieving goals or initiating change.

Force Field Analysis

A management technique developed by Kurt Lewin to analyze the factors (forces) that contribute to or restrain from a particular change.

Kaizen Approach

A methodology focused on continuous improvement in all aspects of an organization through small, incremental changes.