Use the Table for the Question(s)below

question 69

Multiple Choice

Use the table for the question(s) below.
Consider the following covariances between securities:
-Which of the following statements is FALSE?

• A)We say a portfolio is an efficient portfolio whenever it is possible to find another portfolio that is better in terms of both expected return and volatility.
• B)We can rule out inefficient portfolios because they represent inferior investment choices.
• C)The volatility of the portfolio will differ,depending on the correlation between the securities in the portfolio.
• D)Correlation has no effect on the expected return on a portfolio.

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Definitions:

Fair Value Measurements

Assessments of the estimated market value of an asset or liability, based on assumptions about risk and the valuation techniques used.

GAAP Hierarchy

A framework that categorizes the importance and authority of different accounting principles and guidelines in the U.S. Generally Accepted Accounting Principles (GAAP).

Valuation Method

Techniques or approaches used to determine the market value of assets, businesses, or financial instruments.

Historical Costs

The original monetary value of an asset or liability, without adjusting for inflation or changes in market value.