Which of the Following Statements Is False

question 72

Multiple Choice

Which of the following statements is false?

• A) Because diversification improves with the number of stocks held in a portfolio, an efficient portfolio should be a large portfolio containing many different stocks.
• B) The beta of a security is the sensitivity of the security's return to the return of the overall market.
• C) An efficient portfolio cannot be diversified further; that is, there is no way to reduce the risk of the portfolio without lowering its expected return.
• D) We call a portfolio that contains only unsystematic risk an efficient portfolio.

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Definitions:

Production

The process of creating goods or services using inputs like labor, capital, and natural resources.

Production Possibilities Curve

A graphical representation showing the maximum number of goods or services that can be produced using limited resources efficiently.

Normative Statements

Statements that express value judgments or opinions about what ought to be, rather than facts that can be tested or verified.

Facts

Pieces of information that are verifiably true and can be proven with evidence or observation.