Which of the Following Statements Is False

question 1

Multiple Choice

Which of the following statements is false?

• A) Because very little trading is required to maintain it, an equal-weighted portfolio is called a passive portfolio.
• B) If the number of shares in a value-weighted portfolio does not change, but only the prices change, the portfolio will remain value-weighted.
• C) The CAPM says that individual investors should hold the market portfolio, a value-weighted portfolio of all risky securities in the market.
• D) A price-weighted portfolio holds an equal number of shares of each stock, independent of their size.

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Definitions:

Cumulative

Refers to an overall amount that includes all accumulated adjustments, additions, charges, and other relevant items over a period.

Preferred Stock

Type of stock that provides dividends before common stock and carries no voting rights, offering a higher claim on assets and earnings.

Par Value

The nominal or face value of a bond, stock, or coupon as stated in the financial instrument, which is a significant figure for calculating interest payments or dividends.

Par Value

The nominal or face value of a stock or bond as stated by the issuing company, often used in the context of bonds.