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:

Asserted

Stated or expressed positively and often forcefully or aggressively.

Assert Proposition

To claim that a certain proposition, a statement that can be true or false, is true.

Hypothetical-deductive Reasoning

A cognitive process, identified by Piaget, involving the ability to formulate hypotheses and systematically deduce the most logical consequences to solve a problem.

Formal Operational Thought

A stage in cognitive development, according to Piaget, where individuals develop the ability to think abstractly, logically, and systematically, usually beginning in adolescence.