Which of the Following Statements Is FALSE

question 53

Multiple Choice

Which of the following statements is FALSE?

• A) The risk premium of a security is equal to the market risk premium divided by the amount of market risk present in the security's returns measured by its beta with the market.
• B) The beta of a portfolio is the weighted average beta of the securities in the portfolio.
• C) There is a linear relationship between a stock's beta and its expected return.
• D) A security with a negative beta has a negative correlation with the market, which means that this security tends to perform well when the rest of the market is doing poorly.

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Definitions:

Earlobes

The lower part of the external ear, which is made of soft skin and fatty tissue and hangs down freely.

Fetus

A developing human from roughly eight weeks after conception until birth in mammalian species, particularly humans.

Cochlea

A spiral-shaped cavity in the inner ear that plays a key role in the sense of hearing by converting sound waves into nerve impulses.

Tympanic Membrane

Also known as the eardrum, a thin membrane that separates the external ear from the middle ear and vibrates in response to sound waves.