Which of the Following Statements Is FALSE

question 47

Multiple Choice

Which of the following statements is FALSE?

• A)Because diversification improves with the number of stocks held in a portfolio an efficient portfolio should be a large portfolio containing many different stocks.
• B)The beta of a security is the sensitivity of the security's return to the return of the overall market.
• C)An efficient portfolio cannot be diversified further,that is there is no way to reduce the risk of the portfolio without lowering its expected return.
• D)We call a portfolio that contains only unsystematic risk an efficient portfolio.

---

Definitions:

Inputs

The resources, such as capital, labor, and materials, used in the production process to create goods or services.

Marginal Product

The increase in output that occurs when one more unit of a certain input is added, with all other inputs remaining the same.

Profit Maximization

The process or strategy used by businesses to determine the price and output level that leads to the highest profit.

Demand Curve

A graphical representation that shows the relationship between the price of a good or service and the quantity demanded for it over a given period of time.