Which of the Following Statements Is FALSE

question 22

Multiple Choice

Which of the following statements is FALSE?

• A)A portfolio is efficient if it has the highest possible Sharpe ratio; that is it is efficient if it provides the largest increase in expected return possible for a given increase in volatility.
• B)The required return for an investment is equal to a risk premium that is equal to the risk premium of the investor's current portfolio scaled by .
• C)Increasing the investment in investment I will increase the Sharpe ratio of portfolio P if its expected return E[R_i] exceeds the required return r_i,which is given by r_i = r_f + × (E[R_p] - r_f).
• D)If a security i's expected return is less than the required return r_i,we should reduce our holding of security i.

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Definitions:

Income Comparisons

The evaluation or analysis of an individual's or group's income in relation to others within the same society or economy.

Implicit Marginal Tax Rate

The effective additional tax rate imposed on an individual or entity's incremental income, typically factoring in deductions, exemptions, and benefits phase-outs.

Government Benefits

Entail various forms of financial aid and services provided by the government to individuals and organizations, such as healthcare, education, and social security.

Tax Rate

The tax rate is the percentage at which an individual or corporation is taxed by the government on income, transactions, or property.