Which of the Following Statements Is FALSE

question 96

Multiple Choice

Which of the following statements is FALSE?

• A)When the correlation between securities is less than 1, the volatility of the portfolio is reduced due to diversification.
• B)An investor seeking high returns and low volatility should only invest in an efficient portfolio.
• C)Efficient portfolios can be easily ranked, because investors will choose from among them those with the highest expected returns.
• D)When shares are perfectly positively correlated, the set of portfolios is identified graphically by a straight line between them.

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Definitions:

Process

A series of actions or steps taken in order to achieve a particular end.

Favorable Variance

The difference between actual results and expected (budgeted) results that indicates more efficient or cost-effective performance.

Actual Cost

The actual expenses incurred in acquiring an asset or delivering a service, including all relevant expenditures without estimation.

Budgeted Cost

The estimated or planned amount of money allocated for a particular purpose or period of time.