Which of the Following Statements Is FALSE

question 39

Multiple Choice

Which of the following statements is FALSE?

• A) Smaller company shares have lower volatility than larger stocks.
• B) Investors would not choose to hold a portfolio that is more volatile unless they expected to earn a higher return.
• C) The shares of the largest companies are typically more volatile than a portfolio of large cap shares.
• D) Expected return should rise proportionately with volatility.

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Definitions:

Expectations

The anticipations of consumers, firms, and others about future economic conditions.

Firms

Business entities or organizations engaged in commercial, industrial, or professional activities, aiming to produce and sell goods or services to consumers.

Law Of Supply

The principle that, other things equal, an increase in the price of a product will increase the quantity of it supplied, and conversely for a price decrease.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that suppliers are willing to produce and sell.