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:

Labor Surplus

A situation where the supply of labor exceeds the demand, often leading to unemployment or lower wages.

Financial Losses

Negative financial outcomes resulting from business operations, investments, or other financial activities, where expenses exceed revenues.

Transitional Matrix

A mathematical tool used in Markov chain analysis, representing the probabilities of transitioning from one state to another in a dynamic system.

Propensity Analysis

A statistical method used to predict the likelihood of a certain event or behavior occurring.