Which of the Following Statements Is FALSE

question 34

Multiple Choice

Which of the following statements is FALSE?

• A)The beta of a portfolio is the weighted average beta of the securities in the portfolio.
• B)The expected return of a portfolio should correspond to the portfolio's beta.
• C)By holding a negative-beta security, an investor can reduce the overall market risk of her portfolio.
• D)Graphically, the line through the risk-free investment and the market portfolio is called the capital market line (CML).

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Definitions:

Normal Rate of Return

The standard profit or return that is anticipated on an investment, considering the levels of risk and market conditions.

Computer Software Industry

The sector involved in the development, maintenance, and publication of software that offers different types of services or functions for computer users.

Computer Industry

Refers to the business sector involved in the development, manufacturing, and sale of computers, computer components, and software.

Substitute Capital

Assets or investments that can be used as alternatives to others, capable of fulfilling similar functions or bringing similar returns in a portfolio.