Which of the Following Statements Is False

question 37

Multiple Choice

Which of the following statements is false?

• A) The coefficient of variation is a better measure of risk than the standard deviation if the expected returns of the securities being compared differ significantly.
• B) Managers cannot act in the best interests of their shareholders unless they know their shareholders' average time preference for receiving their money and what risks a typical shareholder is prepared to assume.
• C) Companies should deliberately increase their risk relative to the market only if the actions that increase the risk also increase the expected rate of return on the firm's assets by enough to completely compensate for the higher risk.
• D) If the expected rate of return for a particular investment,as seen by the marginal investor,exceeds its required rate of return,we should soon observe an increase in demand for the investment,and the price will likely increase until a price is established that equates the expected return with the required return.
• E) All of the above statements are correct.

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Definitions:

Wilcoxon Rank Sum Test

A nonparametric statistical test used to compare two independent samples to ascertain if they come from the same distribution.

Shift In Distribution

A change in the overall characteristics of a data set's distribution, such as its mean, variance, or shape, that deviates from a previously observed or expected pattern.

Rejection Region

In hypothesis testing, the range of values for which the null hypothesis is rejected, indicating that the observed data is highly unlikely under the null hypothesis.

Wilcoxon Rank Sum Test

A nonparametric test that compares two independent groups to assess if their populations have the same distribution.