Which of the Following Statements Is FALSE

question 8

Multiple Choice

Which of the following statements is FALSE?

• A)A significant fraction of investors might care about aspects of their portfolios other than expected return and volatility,and so would be unwilling to hold inefficient investment portfolios.
• B)Although the true market portfolio of all invested wealth might be efficient,the proxy portfolio might not track the actual market very well.
• C)We might be using the wrong proxy portfolio when we calculate alphas.
• D)The true market portfolio consists of all traded investment wealth in the economy.

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Definitions:

Present Value

The current value of a future amount of money or stream of cash flows, discounted at a particular interest rate.

Simple Interest

Interest assessed only on the principal sum, or on the part of the principal that still needs to be repaid.

Principal Amount

The original sum of money borrowed in a loan or invested, distinct from interest or profit earned.

Invested

To be invested refers to the allocation of resources, such as capital or time, into a particular venture, asset, or effort with the expectation of generating a future return.