Which of the Following Statements Is False

question 43

Multiple Choice

Which of the following statements is false?

• A) The market capitalization is the total market value of its outstanding shares.
• B) The market portfolio is the portfolio of all risky investments.
• C) Many practitioners believe it insensible to use the CAPM and the security market line as a practical means to estimate a stock's required return and therefore a firm's equity cost of capital.
• D) To estimate the equity cost of capital using the CAPM, the first thing we need to do is identify the market portfolio.

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Definitions:

Rewards

Compensation or incentives given to individuals or groups for achieving specific goals or performance targets.

Internal Competition

Competitive dynamics within an organization, where members or departments compete against each other for resources, recognition, or advancement.

Diffusion

The process through which innovations, ideas, or practices are spread within a population or community over time.

Innovation

The process of translating an idea or invention into a good or service that creates value or for which customers will pay.