Which of the Following Statements Is False

question 19

Multiple Choice

Which of the following statements is false?

• A) Nonzero alphas may merely indicate that the wrong market proxy is beings used; they do not necessarily indicate forgone positive NPV investment opportunities.
• B) The true market portfolio contains much more than just stocks, it includes bonds, real estate, art, precious metals, and any other investment vehicles available.
• C) If the true market portfolio is efficient, but the proxy portfolio is not highly correlated with the true market portfolio, then the true market portfolio will not be efficient and stocks will have nonzero alphas.
• D) Much of the investment wealth cannot be included in the proxy for the market portfolio since it does not trade in competitive markets.

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Definitions:

Placebo

A safe medication or treatment recommended primarily for its mental comfort to the patient rather than its physical health benefits.

Confounding Variable

An outside influence that changes the effect of a dependent and independent variable, potentially leading to a false association.

Random Assignment

The process of distributing participants or items in an experiment into different groups using randomization, to reduce bias and ensure statistical validity.

New Diet

Refers to a recently adopted eating plan or regimen aimed at achieving specific health or fitness goals.