Which of the Following Statements Is FALSE

question 41

Multiple Choice

Which of the following statements is FALSE?

• A)To improve the performance of their portfolios,investors who are holding the market portfolio will compare the expected return of each security with its required return from the security market line.
• B)The Sharpe ratio of a portfolio will increase if we sell stocks with positive alphas.
• C)When a stock's alpha is not zero,investors can improve upon the performance of the market portfolio.
• D)When the market portfolio is efficient,all stocks are on the security market line and have an alpha of zero.

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Definitions:

Travertine

A variety of limestone that is commonly concentrically banded and porous.

Karst Topography

A landscape formed from the dissolution of soluble rocks such as limestone, characterized by sinkholes, caves, and underground drainage systems.

Sinkhole

A depression or hole in the ground caused by the collapse of a surface layer, often due to the dissolution of underlying limestone, volcanic activity, or water withdrawal from wells.

Stalactite

A type of speleothem that hangs from the ceiling of limestone caves, formed by the deposition of minerals from dripping water.