Use the Table for the Question(s)below

question 14

Multiple Choice

Use the table for the question(s) below.
Consider the following three individuals portfolios consisting of investments in four stocks:
-Which of the following statements is FALSE?

• A)Investors may have different information regarding expected returns,correlations,and volatilities,but they correctly interpret that information and the information contained in market prices and they adjust their estimates of expected returns in a rational way.
• B)Investors may learn different information through their own research and observations,but as long as they understand the differences in information and learn from other investors by observing prices,the CAPM conclusions still stand.
• C)Every investor,regardless of how much information he has access to,can guarantee himself an alpha of zero by holding the market portfolio.
• D)The CAPM requires making the strong assumption of homogeneous expectations.

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Definitions:

Written Analysis

The process of critically evaluating or discussing a subject in written form to understand its components or relationships.

Bins

Storage containers or categories used in data analysis for grouping data points, or in physical organization to sort items.

Measurement Values

Quantitative data obtained from measuring objects or events, used for analysis or comparison.

Frequency Distributions

A statistical analysis showing the number of instances in which a variable takes each of its possible values.