Which of the Following Is Incorrect

question 30

Multiple Choice

Which of the following is incorrect?

• A)It is possible to combine assets that all move in the exact same fashion over time and gain the benefits of diversification.
• B)Adding long-term Treasury bonds to a stock portfolio will reduce the risk of the portfolio.
• C)The optimal portfolio is the one with the lowest amount of risk.
• D)All of these statements are correct.

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Definitions:

Misallocated

A situation where resources are used inefficiently, resulting in lost potential output or wasteful expenditures.

Market Failure

A situation in which the allocation of goods and services by a free market is not efficient, often leading to a social welfare loss.

Public Good

An offering of goods or services to society's members at no cost, made available by public institutions or private bodies or individuals, not aiming to generate profits.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available for everyone to use without diminishing their availability to others.