Which of the Following Is NOT a Correct Statement

question 92

Multiple Choice

Which of the following is NOT a correct statement?

• A)Risk-averse investors like expected returns and dislike risk, and therefore require compensation to assume additional risk.
• B)Efficient portfolios are those portfolios that offer the highest expected return for a given level of risk, or offer the lowest risk for a given expected return.
• C)The minimum variance portfolio is a portfolio that lies on the efficient frontier and has the minimum amount of portfolio risk available from any possible combination of available securities.
• D)Portfolios on the lower segment of the minimum variance frontier dominate portfolios that lie above the minimum variance portfolio on the upper segment.

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Definitions:

Coupon

The interest rate disbursed annually on a bond, indicated as a percent of its face value.

Bond Price

Bond price is the present value of a bond's future interest payments and its redemption value at maturity, which fluctuates with interest rates and the bond's credit rating.

Tax Exempt Equivalent Yield

A calculation that determines the return needed on a taxable bond to make it equivalent to the yield on a tax-exempt bond, factoring in the investor's tax rate.

Marginal Tax Rate

The amount of tax paid on an additional dollar of income.