Which of the Following Statements Is FALSE

question 33

Multiple Choice

Which of the following statements is FALSE?

• A)Portfolios with higher volatility have historically rewarded investors with higher average returns.
• B)Investments with higher volatility should have a higher risk premium and therefore higher returns.
• C)Volatility seems to be a reasonable measure of risk when evaluating returns on large portfolios and the returns of individual securities.
• D)Riskier investments must offer investors higher average returns to compensate them for the extra risk they are taking on.

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Definitions:

Anti-Recession Policies

Government measures intended to combat economic downturns, involving fiscal and monetary actions to stimulate the economy.

Equation of Exchange

An economic equation that describes the relationship between the money supply, velocity of money, price level, and an economy's output.

GDP Rise

An increase in the Gross Domestic Product, indicating growth in the economy and the production of goods and services.

Velocity

In economic terms, the rate at which money is exchanged from one transaction to another and how much a unit of currency is used in a given period.