Which of the Following Statements Is False

question 47

Multiple Choice

Which of the following statements is false?

• A) The Sharpe ratio measures the ratio of volatility-to-reward provided by a portfolio.
• B) Borrowing money to invest in stocks is referred to as buying stocks on margin.
• C) The Sharpe ratio is the number of standard deviations the portfolio's return would have to fall to under-perform the risk-free investment.
• D) The slope of the line through a given portfolio is often referred to as the Sharpe ratio of the portfolio.

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Definitions:

Standard Error

A measure of the dispersion or variability in a sample statistic from the population parameter.

Infinite Population

A theoretical concept where the population size is considered unlimited or endlessly large for statistical analysis.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, which can be used to make inferences about a population.

Central Limit Theorem

A theorem that enables one to use the normal probability distribution to approximate the sampling distribution of x whenever the sample size is large.