Which of the Following Statements Is FALSE

question 6

Multiple Choice

Which of the following statements is FALSE?

• A) Because all investors should hold risky securities in the same proportions as the efficient portfolio, their combined portfolio will also reflect the same proportions as the efficient portfolio.
• B) The Capital Asset Pricing Model (CAPM) assumptions hold that the return on any portfolio is the combination of the risk-free rate of return plus a risk premium proportional to the amount of systematic risk in the investment.
• C) Graphically, when the tangent line goes through the market portfolio, it is called the security market line (SML).
• D) A portfolio's risk premium and volatility are determined by the fraction that is invested in the market.

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Definitions:

Compounds

Substances formed by the chemical combination of two or more elements in definite proportions and structure.

Secondary Amine

A type of amine in which a nitrogen atom is bonded to two alkyl or aryl groups and one hydrogen, playing critical roles in organic synthesis and functioning as bases.

Compounds

Substances formed by the chemical combination of two or more elements in definite proportions.

Tertiary Amine

An amine in which the nitrogen atom is connected to three alkyl or aryl groups, often characterized by strong bases and found in various organic compounds.