Select the Incorrect Statement Regarding the CML

question 41

Multiple Choice

Select the incorrect statement regarding the CML.

• A)The CML is an equilibrium relationship for efficient portfolios and individual securities.
• B)The CML represents the risk-return tradeoff for efficient portfolios.
• C)The intercept of the CML is the reward to investors for deferring consumption.
• D)The CML relies on standard deviation as the measure of risk.

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Definitions:

Retrospective Approach

The retrospective approach involves revising previously issued financial statements to reflect changes in accounting policy as if the new policy had always been in effect.

Change In Accounting Principle

An adjustment made to the accounting methods used by a company, requiring retrospective restatement of prior financial statements to reflect the new principle.

Disclosure Rules

These are regulations requiring companies to provide full, fair, and timely Disclosure of financial statements and other significant information.

Comprehensive Income

Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.