Which of the Following Statements Is FALSE

question 55

Multiple Choice

Which of the following statements is FALSE?

• A) If we increase the fraction invested in the efficient portfolio beyond 100%m we are short selling the risk-free investment.
• B) As we increase the fraction invested in the efficient portfolio, we increase our risk premium but not our risk proportionately.
• C) To earn the highest possible expected return for any level of volatility we must find the portfolio that generates the steepest possible line when combined with the risk-free investment.
• D) Every investor should invest in the tangent portfolio independent of his or her taste for risk.

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Definitions:

Primacy Effect

The tendency to remember information at the beginning of a list better than information that comes later.

False Positives

Occurrences where a test incorrectly indicates the presence of a condition or attribute.

Eyewitness Testimony

Evidence provided by people who witnessed an event or crime, detailing what they observed.

Auditory Memories

Memories that are associated with hearing, including the recall of sounds, music, words, and other auditory stimuli.