Which of the Following Statements Is FALSE

question 86

Multiple Choice

Which of the following statements is FALSE?

• A)If the market portfolio were not efficient,investors could find strategies that would "beat the market" with higher average returns and lower risk.
• B)The CAPM states that the cost of capital depends only on systematic risk.
• C)The Capital Asset Pricing Model (CAPM)is primarily a theoretical model and is rarely used in practice to estimate the cost of capital.
• D)The market portfolio is an efficient portfolio.

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Definitions:

Severe Recession

An extended period of significant decline in economic activity across the economy, typically characterized by high unemployment, low consumer spending, and reduced industrial production.

Fiscal Policy

Government policies regarding taxation and spending that influence the economy by changing the level of income and aggregate demand.

Welfare Programs

Governmental provisions designed to support the well-being of citizens in need, including financial assistance, healthcare, and food support.

Income Taxes

Taxes that individuals or entities pay on the money they earn over a certain period, typically a year.