Which of the Following Statements Is False

question 97

Multiple Choice

Which of the following statements is false?

• A) The beta of a security is the ratio of its volatility due to market risk to the volatility of the market as a whole.
• B) Under the CAPM assumptions, the market portfolio is efficient, so beta is the appropriate measure of risk to determine a security's risk premium.
• C) Under the CAPM assumptions, we can identify the efficient portfolio: it is equal to the market portfolio.
• D) We can determine the expected return for a security and the cost of capital of an investment opportunity by using the risk-free investment as a benchmark.

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Definitions:

Cost of Goods Available for Sale

The total cost of goods produced or purchased and ready for sale during a specific period, including beginning inventory plus purchases or manufacturing costs.

Inventory Method

A systematic approach to determine the value of inventory at the beginning and end of an accounting period to calculate the cost of goods sold.

Inventory Item

A specific product or goods that are held in stock by a business, potentially for sale or manufacturing purposes.

Place and Condition

Terms used to refer to the physical location and state of goods in a transaction, affecting their valuation and delivery responsibilities.