Which of the Following Statements Is False

question 106

Multiple Choice

Which of the following statements is false?

• A) Because all investors should hold the risky securities in the same proportions as the efficient portfolio, their combined portfolio will also reflect the same proportions as the efficient portfolio.
• B) When the CAPM assumptions hold, choosing an optimal portfolio is relatively straightforward: it is the combination of the risk-free investment and the market portfolio.
• C) Graphically, when the tangent line goes through the market portfolio, it is called the security market line (SML).
• D) A portfolio's risk premium and volatility are determined by the fraction that is invested in the market.

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Definitions:

Avocado

A fruit with a creamy texture that grows in warm climates, rich in monounsaturated fats and nutrients.

Crab Dip

A savory spread or appetizer made primarily from crab meat mixed with cream cheese, herbs, and spices.

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A dry, thin baked food typically made from flour and seasoned.

Utility-maximizing

A principle in economics where consumers aim to get the greatest satisfaction from their spending, given their budget constraint.