Which of the Following Statements Is False

question 25

Multiple Choice

Which of the following statements is false?

• A) If the CAPM correctly computes the risk premium, investors would stop investing only when they expected the alpha of an investment strategy to be negative.
• B) If the CAPM correctly computes the risk premium, an investment opportunity with a positive alpha is a positive NPV investment opportunity.
• C) If the CAPM correctly computes the risk premium, investors should flock to invest in positive alpha stocks.
• D) Anyone can implement a momentum trading strategy and therefore generate a positive investment opportunity.

---

Definitions:

Perfect

In legal and financial contexts, to complete the necessary legal steps to secure a lien or claim on property as a security interest.

Collateral

Assets pledged by a borrower to secure a loan or other credit, and subject to seizure in the event of default.

Debtor

An individual or entity that owes money or an obligation to another, the creditor.

Secured Party

A lender or creditor who has an interest, typically through a lien, in the collateral offered by a borrower or debtor to secure a loan or obligation.