Which of the Following Statements Is FALSE

question 25

Multiple Choice

Which of the following statements is FALSE?

• A)When an investor chooses her optimal portfolio,she will do so by finding the tangent line using the risk-free rate that corresponds to her investment horizon.
• B)If the market portfolio is not efficient,savvy investors who recognize that the market portfolio is not optimal will push prices and expected returns back into balance.
• C)Even though different investors may research different stocks,their information will not impact the market portfolio since there is no way to share this information with other investors.
• D)In the real world,borrowers pay higher interest rates than savers receive.

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Definitions:

Liability Account

An accounting record that captures the amounts owed to others, representing claims against a company’s assets.

Owner's Equity

The portion of a company's assets that belongs to the owners after all liabilities have been subtracted.

Net Income

The total earnings of a company after deducting all expenses from revenues, representing the profit.

Owner's Drawings

The amount of money taken out from the business by the owner(s) for personal use.