Which of the Following Statements Is False

question 89

Multiple Choice

Which of the following statements is false?

• A) Without trading, the portfolio weights will decrease for the stocks in the portfolio whose returns are above the overall portfolio return.
• B) The expected return of a portfolio is simply the weighted average of the expected returns of the investments within the portfolio.
• C) Portfolio weights add up to 1 so that they represent the way we have divided our money between the different individual investments in the portfolio.
• D) A portfolio weight is the fraction of the total investment in the portfolio held in an individual investment in the portfolio.

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Definitions:

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values around the mean.

Average Amount

A statistical measure that represents the central or typical value in a set of data, often the mean, median, or mode.

Standard Deviation Units

A measure of the amount of variation or dispersion of a set of values, indicating how much the individual values differ from the mean of the sample.

Normal Distribution

A normal distribution is a bell-shaped frequency distribution curve, where most of the occurrences take place around the central peak, and the probabilities of values further away from the mean taper off symmetrically.