Use the Table for the Question(s)below

question 3

Multiple Choice

Use the table for the question(s) below.
Consider the following expected returns,volatilities,and correlations:
-Which of the following statements is FALSE?

• A)The tangent portfolio is efficient and that,once we include the risk-free investment,all efficient portfolios are combinations of the risk-free investment and the tangent portfolio.
• B)The optimal portfolio of risky investments depends on how conservative or aggressive the investor is.
• C)By combining the efficient portfolio with the risk-free investment,an investor will earn the highest possible expected return for any level of volatility her or she is willing to bear.
• D)The efficient portfolio is the tangent portfolio,the portfolio with the highest Sharpe ratio in the economy.

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Definitions:

ERG Theory

A motivational theory developed by Clayton Alderfer that categorizes human needs into three groups: Existence, Relatedness, and Growth, suggesting that individuals are motivated to satisfy these needs.

Clayton Alderfer

An American psychologist known for his expansion of Maslow's hierarchy of needs with the development of the ERG (Existence, Relatedness, Growth) theory.

Hierarchy of Needs

A psychological theory proposed by Abraham Maslow that depicts human motivations as a five-tier model of hierarchical needs, ranging from basic (physiological) to higher-order (self-actualization) needs.

Self-Actualization Need

The highest level in Maslow's hierarchy of needs, referring to the realization and fulfillment of one's talents and potentialities.