Which of the Following Statements Is FALSE

question 81

Multiple Choice

Which of the following statements is FALSE?

• A)Because diversification improves with the number of stocks held in a portfolio,an efficient portfolio should be a large portfolio containing many different stocks.
• B)The beta of a security is the sensitivity of the security's return to the return of the overall market.
• C)An efficient portfolio cannot be diversified further.That is,there is no way to reduce the risk of the portfolio without lowering its expected return.
• D)We call a portfolio that contains only unsystematic risk an efficient portfolio.

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Definitions:

Work in Process Inventory

The cost accumulated for all materials, labor, and overhead for products that are partially through the production process.

Total Manufacturing Costs

The aggregate of all costs involved in producing a finished product, including direct materials, direct labor, and manufacturing overhead.

Manufacturing Overhead Applied

The amount of manufacturing overhead costs allocated to individual products or product lines based on a predetermined overhead rate.

Direct Materials

Raw materials that are directly used in the manufacturing of a product and can be easily traced back to the finished goods.