Which of the Following Statements Is False

question 32

Multiple Choice

Which of the following statements is false?

• A) If the market portfolio is efficient, then all securities and portfolios must plot on the SML, not just individual stocks.
• B) For most stocks the standard errors of the alpha estimates are large, so it is impossible to conclude that the alphas are statistically different from zero.
• C) It is not difficult to find individual stocks that, in the past, have not plotted on the SML.
• D) Small stocks (those with lower market capitalization) have lower average returns.

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Definitions:

Collect Payment

the act of receiving money that is owed, typically in exchange for goods or services.

Risk of Loss

Refers to the chance that an investment's actual returns will be different than expected, including the possibility of losing some or all the original investment.

Breaches

Incidents where laws, contracts, or promises have been violated or not fulfilled.

Identification

The process of determining or establishing the identity of a person or thing.