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:

Traditionals

Typically refers to individuals or groups that adhere to traditional values and practices, often preferring stability and continuity over change.

Systems

Organized sets of principles or procedures according to which something is done; an assemblage of interrelated elements that function as a whole.

Procedures

A set of established methods or steps taken to perform a task or solve a problem.

Organized Way

A methodical and systematic approach to completing tasks or achieving goals, emphasizing planning and structure.