Which of the Following Statements Is FALSE

question 63

Multiple Choice

Which of the following statements is FALSE?

• A)The market portfolio is the efficient portfolio.
• B)Many practitioners believe it is sensible to use the CAPM and the security market line as a practical means to estimate a stock's required return and therefore a firm's equity cost of capital.
• C)If we plot individual securities according to their expected return and beta,the CAPM implies that they should all fall along the CML.
• D)As savvy investors attempt to trade to improve their portfolios,they raise the price and lower the expected return of the positive alpha stocks,and they depress the price and raise the expected return of negative alpha stocks,until the stocks are once again on the security market line and the market portfolio is efficient.

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Definitions:

Government Regulations

Rules established by governments designed to control the way companies and individuals conduct business, protecting the public's interests.

Tailor Products

To customize or modify products to meet specific customer requirements or preferences, enhancing satisfaction and competitive advantage.

Global Company

A business entity that operates in multiple countries around the world, transcending national borders.

Differentiate Marketing

Marketing strategies that highlight the unique aspects of a product or service to distinguish it from competitors in the market.