Which of the Following Statements Is False

question 97

Multiple Choice

Which of the following statements is false?

• A) The beta of a security is the ratio of its volatility due to market risk to the volatility of the market as a whole.
• B) Under the CAPM assumptions, the market portfolio is efficient, so beta is the appropriate measure of risk to determine a security's risk premium.
• C) Under the CAPM assumptions, we can identify the efficient portfolio: it is equal to the market portfolio.
• D) We can determine the expected return for a security and the cost of capital of an investment opportunity by using the risk-free investment as a benchmark.

Understand and calculate break-even points in units and dollars.

Apply fixed and variable cost concepts to determine required sales for targeted net income.

Analyze the effects of capacity utilization on net income and break-even points.

Determine the contribution margin and its importance in pricing and profitability analysis.

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