Which of the Following Statements Is False

question 7

Multiple Choice

Which of the following statements is false?

• A) When stocks are perfectly positively correlated, the set of portfolios is identified graphically by a straight line between them.
• B) An investor seeking high returns and low volatility should only invest in an efficient portfolio.
• C) When the correlation between securities is less than 1, the volatility of the portfolio is reduced due to diversification.
• D) Efficient portfolios can be easily ranked, because investors will choose from among them those with the highest expected returns.

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Definitions:

Total Utility

The overall satisfaction or value a consumer receives from consuming a given quantity of goods or services.

Negative Marginal Utility

The decrease in satisfaction or usefulness obtained from consuming one more unit of a product, leading to decreased overall utility.

Candy Bars

Pre-packaged, convenient, sweet confections commonly made from chocolate and other ingredients like nuts, caramel, or nougat.