Which of the Following Statements Is False

question 37

Multiple Choice

Which of the following statements is false?

• A) A combination of portfolios on the efficient frontier of risky investments is also on the efficient frontier of risky investments.
• B) The conclusion of the CAPM that investors should hold the market portfolio combined with the risk-free investment depends on the quality of an investor's information.
• C) The SML holds with some rate r* between r_s and r_b in place of r_f, where r* depends on the proportion of savers and borrowers in the economy.
• D) In reality, investors have different information and spend varying amounts of effort on research for assorted stocks.

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Definitions:

Representativeness Heuristic

A cognitive shortcut that involves making judgments based on how much one thing resembles another.

Creating Subgoals

The strategy of breaking down a goal into smaller, more manageable tasks or objectives that are easier to achieve step by step.

Using Algorithms

The practice of applying a step-by-step procedure or formula for solving problems or performing tasks.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.