Which of the Following Statements Is FALSE

question 36

Multiple Choice

Which of the following statements is FALSE?

• A) A portfolio is efficient if it has the highest possible Sharpe ratio; that is it is efficient if it provides the largest increase in expected return possible for a given increase in volatility.
• B) The required return for an investment is equal to a risk premium that is equal to the risk premium of the investor's current portfolio scaled by .
• C) Increasing the investment in investment I will increase the Sharpe ratio of portfolio P if its expected return E[R_i] exceeds the required return r_i, which is given by r_i = r_f + × (E[R_p] - r_f).
• D) If a security i's expected return is less than the required return r_i, we should reduce our holding of security i.

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Definitions:

British North American Act

A 19th century act of the Parliament of the United Kingdom that established a federation and a federal system of government for Canada.

Wildlife

Animals, plants, and other organisms living in their natural habitats undomesticated or unaffected by human activity, important for biodiversity and ecosystems.

Canada

Canada is a country located in the northern part of North America, known for its vast landscapes, multicultural diversity, and strong economy.

Species At Risk

Species that are in danger of extinction or significant decline, requiring protection and conservation efforts to ensure their survival.