Which of the Following Is a TRUE Statement

question 100

Multiple Choice

Which of the following is a TRUE statement?

• A)The tangent portfolio is the risky portfolio on the efficient frontier whose tangent line cuts the horizontal axis at the risk-free rate.
• B)The new (or super)efficient frontier represents the portfolios composed of the risk-free rate and the tangent portfolio that offers the highest expected rate of return for any given level or risk.
• C)The separation theorem states that the investment decision, (how to construct the portfolio of risky assets), is not separate from the financing decision, (how much should be invested or borrowed in the risk-free asset).
• D)The market portfolio is a portfolio that contains some risky securities in the market.

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Definitions:

Simplify

The process of expressing something in a more comprehensible or simpler form, in mathematics, typically reducing an expression to its simplest form.

Expression

A combination of symbols that represent a mathematical object, such as numbers, variables, and operation symbols, but without an equals sign.

Complex Fraction

A fraction where the numerator, the denominator, or both contain fractions themselves.

Simplify

The process of reducing an expression or equation to its most basic form.