Use the Table for the Question(s)below

question 69

Multiple Choice

Use the table for the question(s) below.
Consider the following covariances between securities:
-Which of the following statements is FALSE?

• A)We say a portfolio is an efficient portfolio whenever it is possible to find another portfolio that is better in terms of both expected return and volatility.
• B)We can rule out inefficient portfolios because they represent inferior investment choices.
• C)The volatility of the portfolio will differ,depending on the correlation between the securities in the portfolio.
• D)Correlation has no effect on the expected return on a portfolio.

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Definitions:

Forward Contracts

Agreements to buy or sell an asset at a future date for a price agreed upon today, often used for hedging or speculation.

Marked-To-The Market

An accounting practice where assets or securities are valued according to their current market price, not their purchase price or book value.

Resold

Items or assets that have been purchased and then sold to another party, potentially at a different price.

Delivery

The process of transferring the possession of a good, commodity, or service to the customer after a sale.