Which of the Following Statements Is False

question 37

Multiple Choice

Which of the following statements is false?

• A) The coefficient of variation is a better measure of risk than the standard deviation if the expected returns of the securities being compared differ significantly.
• B) Managers cannot act in the best interests of their shareholders unless they know their shareholders' average time preference for receiving their money and what risks a typical shareholder is prepared to assume.
• C) Companies should deliberately increase their risk relative to the market only if the actions that increase the risk also increase the expected rate of return on the firm's assets by enough to completely compensate for the higher risk.
• D) If the expected rate of return for a particular investment,as seen by the marginal investor,exceeds its required rate of return,we should soon observe an increase in demand for the investment,and the price will likely increase until a price is established that equates the expected return with the required return.
• E) All of the above statements are correct.

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Definitions:

Organic Product

A compound predominantly consisting of carbon atoms, produced by living organisms or synthetic processes.

Animal

A multicellular, eukaryotic organism of the kingdom Animalia or Metazoa, capable of locomotion and responsive to their environment in various ways.

Plant

Living organisms belonging to the kingdom Plantae that typically grow in a permanent site, absorb water and inorganic substances through their roots, and synthesize nutrients in their leaves by photosynthesis using light energy.

Hydrogenated

Refers to the chemical addition of hydrogen across double or triple bonds in an organic compound, usually to convert unsaturated compounds into saturated ones.