Use the Following Information to Answer the Question(s)below

question 118

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that all stocks can be grouped into two mutually exclusive portfolios (with each stock appearing in only one portfolio) : growth stocks and value stocks.Assume that these two portfolios are equal in size (market value) ,the correlation of their returns is equal to 0.6,and the portfolios have the following characteristics: The risk free rate is 3.5%.
-Which of the following statements is FALSE?

• A)A combination of portfolios on the efficient frontier of risky investments is also on the efficient frontier of risky investments.
• B)The conclusion of the CAPM that investors should hold the market portfolio combined with the risk-free investment depends on the quality of an investor's information.
• C)The SML holds with some rate r* between r_s and r_b in place of r_f,where r* depends on the proportion of savers and borrowers in the economy.
• D)In reality,investors have different information and spend varying amounts of effort on research for assorted stocks.

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Definitions:

Is Null

A condition or statement in databases that checks if a value is absent or empty.

Date/Time

A data type in programming and database management that represents a specific date and time of an event, entry, or transaction.

Table Design View

A feature in database applications allowing users to define and modify the structure, fields, and properties of a database table.

Table Design View

A database tool that allows users to define or modify the structure of a table, including fields and data types.