Which of the Following Statements Is False

question 58

Multiple Choice

Which of the following statements is false?

• A) Investors may have different information regarding expected returns, correlations, and volatilities, but they correctly interpret that information and the information contained in market prices and they adjust their estimates of expected returns in a rational way.
• B) Investors may learn different information through their own research and observations, but as long as they understand the differences in information and learn from other investors by observing prices, the CAPM conclusions still stand.
• C) Every investor, regardless of how much information he has access to, can guarantee himself an alpha of zero by holding the market portfolio.
• D) The CAPM requires making the strong assumptions of homogeneous expectations.

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Definitions:

Powerful People

Individuals who hold significant authority, influence, or control in social, political, or organizational contexts.

Above-average Raises

Refers to salary increases that are higher than what is typically awarded within an organization or industry, often given as a reward for exceptional performance.

Strategic Contingency

A theory or approach which suggests that the effectiveness of a decision, strategy, or leadership style is contingent upon the internal and external environment.

Indispensable Function

Refers to a crucial task or role within an organization that is essential for its operation and success.