Which of the Following Statements Is False

question 4

Multiple Choice

Which of the following statements is false?

• A) To improve the performance of their portfolios, investors who are holding the market portfolio will compare the expected return of each security with its required return from the security market line.
• B) The Sharpe ratio of a portfolio will increase if we sell stocks with positive alphas.
• C) When a stock's alpha is not zero, investors can improve upon the performance of the market portfolio.
• D) When the market portfolio is efficient, all stocks are on the security market line and have an alpha of zero.

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Definitions:

MMC

Maximum Material Condition; a feature size where it contains the maximum amount of material within the stated limits of size.

Perpendicularity

The state or condition of being perpendicular, meaning two lines or planes intersect at a right angle (90 degrees) to each other.

Tolerance of Form

Specifies the allowable deviation from the ideal shape of an object without specifying size, ensuring parts fit together correctly.

Tolerances of Size

Specifies the permissible limits of variation in an object's size, critical for ensuring parts fit together properly in manufacturing.