Which of the Following Statements Is FALSE

question 56

Multiple Choice

Which of the following statements is FALSE?

• A)All investors should demand the same efficient portfolio of securities in the same proportions.
• B)The Capital Asset Pricing Model (CAPM)allows corporate executives to identify the efficient portfolio (of risky assets)by using knowledge of the expected return of each security.
• C)If investors hold the efficient portfolio,then the cost of capital for any investment project is equal to its required return calculated using its beta with the efficient portfolio.
• D)The CAPM identifies the market portfolio as the efficient portfolio.

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Definitions:

Futures Price

Futures Price is the agreed-upon price for the purchase or sale of a particular asset at a future date, determined in the futures market.

Stock Index Futures

Futures contracts to buy or sell a specific stock index at a predetermined price on a specified future date, used for hedging or speculating on the direction of the stock market.

Multiplier

A concept in economics referring to the factor by which a change in investment, government spending, or other economic activity results in a larger change in the gross domestic product (GDP).

Dollars

A unit of currency used in the United States and other countries, symbolized as $.