Which of the Following Statements Is FALSE

question 35

Multiple Choice

Which of the following statements is FALSE?

• A)Margin investing is a risky investment strategy.
• B)Because our return on the risk-free investments is fixed and does not move with (or against)our portfolio,the correlation between the risk-free investment and the portfolio is always equal to one.
• C)Short selling the risk-free investment is equivalent to borrowing money at the risk-free interest rate through a standard loan.
• D)Margin investing can provide higher expected returns than investing in the efficient portfolio using only the funds we have available.

---

Definitions:

Bailment

A legal relationship in which physical possession of personal property is transferred from one person to another with the understanding that the property will be returned.

Pay Stub

A document provided to an employee with each paycheck that details the wages earned for the pay period and the year-to-date, including taxes and other deductions.

Private Carrier

A company or individual that offers transportation services not to the general public but under specific contracts or agreements.

Reasonable Care

The degree of caution and concern an ordinarily prudent and rational person would use in similar circumstances.