Which of the Following Statements Is False

question 99

Multiple Choice

Which of the following statements is false?

• A) Because of the higher and uncompensated risk involved, no investor should choose a portfolio with a negative alpha.
• B) Because the average portfolio of all investors is the market portfolio, the average alpha for all investors is zero.
• C) The market portfolio can be inefficient if a significant number of investors misinterpret information and believe they are earning a positive alpha when they are actually earning a negative alpha.
• D) If no investor earns a positive alpha, then no investor can earn a negative alpha, and the market portfolio must be efficient.

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Definitions:

First Ventricle

Also known as the left ventricle, a chamber of the heart responsible for pumping oxygenated blood to the aorta and systemic circulation.

Limbic System

A complex system of nerves and networks in the brain, involved with instinct and mood, controlling basic emotions, and drives such as fear and pleasure.

Basic Survival Instincts

The innate, automatic behaviors and responses aimed at preserving one’s life and well-being.

Voluntary Movements

Movements controlled consciously by the brain, usually in response to stimuli or as deliberate actions, contrasting with involuntary movements like reflexes.