Which of the Following Statements Is False

question 19

Multiple Choice

Which of the following statements is false?

• A) Nonzero alphas may merely indicate that the wrong market proxy is beings used; they do not necessarily indicate forgone positive NPV investment opportunities.
• B) The true market portfolio contains much more than just stocks, it includes bonds, real estate, art, precious metals, and any other investment vehicles available.
• C) If the true market portfolio is efficient, but the proxy portfolio is not highly correlated with the true market portfolio, then the true market portfolio will not be efficient and stocks will have nonzero alphas.
• D) Much of the investment wealth cannot be included in the proxy for the market portfolio since it does not trade in competitive markets.

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Definitions:

Cost of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Perpetual Inventory System

An inventory tracking system where inventory levels are updated in real-time with each sale or purchase transaction, giving a continuous account of inventory on hand.

Perpetual Inventory System

An inventory tracking system that updates item records continuously as transactions occur.

Cost of Sale

Costs directly related to the production of the goods sold by a company.