Which of the Following Statements Is False

question 49

Multiple Choice

Which of the following statements is false?

• A) Beta differs from volatility.
• B) The risk premium investors can earn by holding the market portfolio is the difference between the market portfolio's expected return and the risk-free interest rate.
• C) Stocks in cyclical industries, in which revenues tend to vary greatly over the business cycle, are likely to be more sensitive to systematic risk and have higher betas than stocks in less sensitive industries.
• D) If we assume that the market portfolio (or the S&P 500) is efficient, then changes in the value of the market portfolio represent unsystematic shocks to the economy.

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Definitions:

Public Decision-making

The process through which decisions are made by public officials or bodies, representing the interests of the public in governmental or community affairs.

Employment-at-will Doctrine

A legal principle that allows employers to terminate employees at any time without reason, as long as the dismissal does not violate specific legal protections.

Legally Enforceable

A term or condition within a contract or agreement that is recognized by law and can be upheld in a court of law.

Union Contract

A legal agreement between a labor union and an employer outlining the terms of employment, working conditions, wages, and other rights and responsibilities.