Which of the Following Statements Is False

question 106

Multiple Choice

Which of the following statements is false?

• A) Because all investors should hold the risky securities in the same proportions as the efficient portfolio, their combined portfolio will also reflect the same proportions as the efficient portfolio.
• B) When the CAPM assumptions hold, choosing an optimal portfolio is relatively straightforward: it is the combination of the risk-free investment and the market portfolio.
• C) Graphically, when the tangent line goes through the market portfolio, it is called the security market line (SML).
• D) A portfolio's risk premium and volatility are determined by the fraction that is invested in the market.

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