Which of the Following Statements Is False

question 32

Multiple Choice

Which of the following statements is false?

• A) If the market portfolio is efficient, then all securities and portfolios must plot on the SML, not just individual stocks.
• B) For most stocks the standard errors of the alpha estimates are large, so it is impossible to conclude that the alphas are statistically different from zero.
• C) It is not difficult to find individual stocks that, in the past, have not plotted on the SML.
• D) Small stocks (those with lower market capitalization) have lower average returns.

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Definitions:

Judgment

The ability to make considered decisions or come to sensible conclusions based on a critical evaluation of evidence and reasoning.

Empowerment

The process of granting individuals or groups the power, authority, and resources to make decisions, take action, and influence outcomes in their work or community.

Rewards

Benefits, privileges, or compensations given to individuals or groups in recognition of their achievements, behavior, or effort.

Decisions

The process of making choices between alternatives to achieve a goal or solve a problem.