Which of the Following Statements Is FALSE

question 24

Multiple Choice

Which of the following statements is FALSE?

• A)Beta differs from volatility.
• B)The risk premium investors can earn by holding the market portfolio is the difference between the market portfolio's expected return and the risk-free interest rate.
• C)Stocks in cyclical industries,in which revenues tend to vary greatly over the business cycle,are likely to be more sensitive to systematic risk and have higher betas than stocks in less sensitive industries.
• D)If we assume that the market portfolio (or the S&P 500)is efficient,then changes in the value of the market portfolio represent unsystematic shocks to the economy.

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Definitions:

Relative Frequency

The ratio of the number of times a particular value or category occurs to the total number of observations.

Total Number

The aggregate count of all units or elements in a set or group.

Qualitative Variable

A variable that describes or categorizes an attribute or quality of an element, often represented as names or labels and not quantifiable.

Numerically

Pertaining to numbers, or expressed in numbers, often relating to numerical data or mathematical calculations.