Which of the Following Statements Is False

question 50

Multiple Choice

Which of the following statements is false?

• A) The most important example of non-tradeable wealth is human capital.
• B) If investors have a significant amount of non-tradeable wealth, this wealth will be an important part of their portfolios, but will not be part of the market portfolio of tradeable securities.
• C) If the entire portfolio of investments is efficient, then just the tradeable part of the portfolio should be efficient also.
• D) Researchers have found evidence that the presence of human capital can explain at least part of the reason for the inefficiency of the most commonly used market proxies.

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Definitions:

Artificial Situation

An environment or circumstance that has been created or manipulated by external forces rather than occurring naturally.

Experiment

A research method in which conditions are controlled and manipulated to test hypotheses and observe the outcomes in a systematic way.

Hypothesized Causes

Proposed explanations or factors that are believed to lead to a particular condition or event, often requiring further investigation or evidence.

Spurious Relationship

A false or misleading correlation between two variables that is not due to any direct relationship but might be due to a third variable or coincidence.