Which of the Following Statements Is FALSE

question 127

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:

Amino-Type

Relates to compounds or functional groups that contain an amino group, characterized by a nitrogen atom attached to hydrogen atoms or organic substituents.

Molecular Weight

The sum of the atomic weights of all atoms in a molecule, used in calculating concentrations and reactions in chemistry.

Ethylene Glycol

A toxic organic compound commonly used as an automotive antifreeze and a precursor to polymers.

1,2-Ethanediol

A chemical compound commonly known as ethylene glycol, used as an antifreeze and precursor to polymers.