Which of the Following Statements Is FALSE

question 39

Multiple Choice

Which of the following statements is FALSE?

• A)A conclusion of the CAPM that investors should hold the market portfolio only if they have high quality information.
• B)A conclusion of the CAPM that investors should hold the market portfolio even if they do not have high trading skills.
• C)Even naive investors with no information should hold the market portfolio.
• D)The CAPM assumption of homogeneous expectations is not necessarily a good description of the real world.

---

Definitions:

Dividends Paid

The portion of a company's earnings that is distributed to shareholders.

Retained Earnings

The portion of net income not distributed as dividends to shareholders but reinvested in the company or kept as reserve.

Tax Schedule

A chart or table provided by taxing authorities that shows the tax rate that applies to different levels of taxable income.

Married Couples

Two individuals legally united in marriage, recognized for various legal, social, or tax purposes.