Use the Table for the Question(s)below

question 14

Multiple Choice

Use the table for the question(s) below.
Consider the following three individuals portfolios consisting of investments in four stocks:
-Which of the following statements is FALSE?

• A)Investors may have different information regarding expected returns,correlations,and volatilities,but they correctly interpret that information and the information contained in market prices and they adjust their estimates of expected returns in a rational way.
• B)Investors may learn different information through their own research and observations,but as long as they understand the differences in information and learn from other investors by observing prices,the CAPM conclusions still stand.
• C)Every investor,regardless of how much information he has access to,can guarantee himself an alpha of zero by holding the market portfolio.
• D)The CAPM requires making the strong assumption of homogeneous expectations.

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Definitions:

Descriptive/Correlational Research Methods

Research strategies for observing and describing behavior objectively and systematically without influencing or interfering with the study.

Practical and Ethical Reasons

Justifications or motives for actions that are based on practicality, effectiveness, and alignment with moral principles.

Naturalistic Observations

A research method used to systematically observe and record behavior in its natural environment without manipulation or control.

Case Studies

Detailed examinations of a single subject (individual, group, or event) to uncover patterns, identify causes, and derive insights.