Which of the Following Statements Is FALSE

question 63

Multiple Choice

Which of the following statements is FALSE?

• A)The market portfolio is the efficient portfolio.
• B)Many practitioners believe it is sensible to use the CAPM and the security market line as a practical means to estimate a stock's required return and therefore a firm's equity cost of capital.
• C)If we plot individual securities according to their expected return and beta,the CAPM implies that they should all fall along the CML.
• D)As savvy investors attempt to trade to improve their portfolios,they raise the price and lower the expected return of the positive alpha stocks,and they depress the price and raise the expected return of negative alpha stocks,until the stocks are once again on the security market line and the market portfolio is efficient.

---

Definitions:

Stimulating Environment

An environment rich in sensory, educational, and social stimuli, which promotes learning and development.

Dendritic Branching

The process by which neurons grow dendrites, the tree-like extensions that receive messages from other neural cells, enhancing neural connectivity.

Stem Cells

Undifferentiated cells with the potential to develop into various cell types for tissue growth, repair, and regeneration.

Specialized Cell

A cell that has a unique structure and function, distinctively equipped to perform a specific task within an organism.