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:

Sellers

Individuals, companies, or entities that offer goods or services for sale in the market.

Tax

Compulsory contributions to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.

Per Unit Burden

The cost or tax imposed on a single unit of a good or service, affecting its production or consumption.

Buyers

People or organizations that buy products or services for personal consumption, for reselling, or to use in manufacturing.