Which of the Following Statements Is False

question 37

Multiple Choice

Which of the following statements is false?

• A) A combination of portfolios on the efficient frontier of risky investments is also on the efficient frontier of risky investments.
• B) The conclusion of the CAPM that investors should hold the market portfolio combined with the risk-free investment depends on the quality of an investor's information.
• C) The SML holds with some rate r* between r_s and r_b in place of r_f, where r* depends on the proportion of savers and borrowers in the economy.
• D) In reality, investors have different information and spend varying amounts of effort on research for assorted stocks.

Evaluate the effect of changing interest rates on financial outcomes.

Understand the concept of the time value of money.

Calculate the required savings for future goals.

Understand the impact of frequency of compounding on investment growth.

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Definitions:

Ordinary Unsecured Creditor

A creditor who has no special rights to assets of a debtor in the event of the debtor's bankruptcy.

Trade Creditors

Entities to whom money is owed for goods and services provided on credit as part of normal business operations.

Liquidator's Remuneration

The compensation paid to a liquidator for their services in administrating the process of winding up a company's affairs and distributing its assets.

Liquidation Account

An account created to collect transactions and balances during the process of liquidating or winding up a company.