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:

S&P 500

A market index representing 500 of the largest companies listed on American stock exchanges.

Pension Funds

Investment pools that collects money from employees for future retirement benefits.

Investment Strategy

A set of rules, behaviors, or procedures designed to guide an investor's selection of an investment portfolio.

Market Prices

Market Prices refer to the current price at which an asset or service can be bought or sold in a particular market.