Which of the Following Statements Is FALSE

question 9

Multiple Choice

Which of the following statements is FALSE?

• A)Nonzero alphas may merely indicate that the wrong market proxy is beings used;they do not necessarily indicate forgone positive NPV investment opportunities.
• B)The true market portfolio contains much more than just stocks,it includes bonds,real estate,art,precious metals,and any other investment vehicles available.
• C)If the true market portfolio is efficient,but the proxy portfolio is not highly correlated with the true market portfolio,then the true market portfolio will not be efficient and stocks will have nonzero alphas.
• D)Much of the investment wealth cannot be included in the proxy for the market portfolio since it does not trade in competitive markets.

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Definitions:

SEC

The Securities and Exchange Commission (SEC) is a U.S. government agency responsible for regulating the securities markets and protecting investors.

Electronic Filing System

A system for submitting documents electronically rather than on paper, typically used for tax returns, legal documents, and other reports.

Federal Securities Laws

Laws in the United States that regulate the offer and sale of securities to protect investors against fraud.

Information Technology

The use of computers, networks, and related technologies to store, retrieve, transmit, and manipulate data or information.