Which of the Following Statements Is False

question 34

Multiple Choice

Which of the following statements is false?

• A) We can improve the performance of our portfolio by selling stocks with negative alphas.
• B) The market portfolio is on the SML, and according to the CAPM, since all other portfolios are inefficient they will not fall on the SML.
• C) The difference between a stock's expected return and its required return according to the security market line is called the stock's alpha.
• D) The risk premium for any security is proportional to its beta with the market.

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Definitions:

Cattell and Horn

Psychologists who developed the theory of fluid and crystallized intelligence, differentiating between the ability to solve new problems and the use of learned knowledge.

Immune System

The immune system is the body's defense mechanism against infectious organisms and other invaders, comprising a network of cells, tissues, and organs.

Bodily Functions

The physiological processes and actions performed by the body’s systems, necessary for maintaining life and health.

Neurological System

The system of the body that includes the brain, spinal cord, and a network of nerves; responsible for transmitting signals between different parts of the body.