Which of the Following Statements Is False

question 6

Multiple Choice

Which of the following statements is false?

• A) When an investor chooses her optimal portfolio, she will do so by finding the tangent line using the risk-free rate that corresponds to her investment horizon.
• B) If the market portfolio is not efficient, savvy investors who recognize that the market portfolio is not optimal will push prices and expected returns back into balance.
• C) Even though different investors may research different stocks, their information will not impact the market portfolio since there is no way to share this information with other investors.
• D) In the real world borrowers pay higher interest rates than savers receive.

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Definitions:

Inflation

The rate at which the average cost of goods and services ascends, leading to a decrease in monetary value over time.

Creditors

Individuals or institutions that lend money or extend credit to others, expecting repayment in the future with interest.

Debtors

Individuals or entities that owe money to another entity, typically as a result of borrowing funds.

Business Owners

Individuals who legally possess a company, assume major risks, and enjoy the benefits from its operation and growth.