Which of the Following Statements Is False

question 1

Multiple Choice

Which of the following statements is false?

• A) Because very little trading is required to maintain it, an equal-weighted portfolio is called a passive portfolio.
• B) If the number of shares in a value-weighted portfolio does not change, but only the prices change, the portfolio will remain value-weighted.
• C) The CAPM says that individual investors should hold the market portfolio, a value-weighted portfolio of all risky securities in the market.
• D) A price-weighted portfolio holds an equal number of shares of each stock, independent of their size.

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Definitions:

Average Fixed Costs

The fixed costs of production (costs that do not change with the level of output) divided by the quantity produced.

Total Costs

The sum of fixed and variable costs incurred by a firm in the production of goods or services.

TC Curve

A graphical representation showing the total cost of producing different quantities of a good or service.

TVC Curve

A graphical representation showing the relationship between a firm's total variable costs and its output level.