Which of the Following Statements Is FALSE

question 54

Multiple Choice

Which of the following statements is FALSE?

• A)Because very little trading is required to maintain it,an equal-weighted portfolio is called a passive portfolio.
• B)If the number of shares in a value-weighted portfolio does not change,but only the prices change,the portfolio will remain value-weighted.
• C)The CAPM says that individual investors should hold the market portfolio,a value-weighted portfolio of all risky securities in the market.
• D)A price-weighted portfolio holds an equal number of shares of each stock,independent of their size.

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Definitions:

Consolidated Financial Statements

Financial statements that show the aggregated financial position and results of operations for a parent company and its subsidiaries.

Subsidiary

A company that is controlled by another company, commonly known as the parent company, through ownership of more than half of its voting stock.

Unrealized Loss

A loss that results from holding onto an asset that has decreased in price, but has not yet been sold.

Trading Investments

Investments in securities for the purpose of selling them in the near term to generate profit from short-term price fluctuations.