Which of the Following Statements Is False

question 45

Multiple Choice

Which of the following statements is false?

• A) A significant fraction of investors might care about aspects of their portfolios other than expected return and volatility, and so would be unwilling to hold inefficient investment portfolios.
• B) Although the true market portfolio of all invested wealth might be efficient, the proxy portfolio might not track the actual market very well.
• C) We might be using the wrong proxy portfolio when we calculate alphas.
• D) The true market portfolio consists of all traded investment wealth in the economy.

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Definitions:

Reasonable Diligence

The level of care or effort that is expected from an individual in a particular situation, which is considered to be sensible and appropriate.

Remedial Measures

Actions taken to correct or address a problem, often implemented to provide a solution or improvement.

Absolute Immunity

A form of legal protection preventing an individual from being sued for their actions, typically granted to certain public officials during their official duties.

Ethics Codes

Written guidelines issued by organizations to their members to help them conduct their actions in accordance with its primary values and ethical standards.