Which of the Following Is Not Correct

question 41

Multiple Choice

Which of the following is not correct?

• A)There is a greater reduction in risk by increasing the number of stocks in a portfolio from 1 to 10,than by increasing it from 100 to 120 stocks.
• B)The historical rate of return on stocks has been about 5 percentage points higher than the historical rate of return on bonds.
• C)Stock in an industry that is very sensitive to economic conditions is likely to have a higher average return than stock in an industry that is not so sensitive to economic conditions.
• D)If you had information about a corporation that no one else had,you could earn a very high rate of return.This contradicts the efficient market hypothesis.

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Definitions:

Conspicuous Font

Text styled in a way that makes it stand out and be easily noticed, typically for legal or official purposes to ensure clarity and attention.

Prospectus

A written document filed with the SEC that contains a description of a security and other financial information regarding the company offering the security; also distributed as an advertising tool to potential investors.

Corporate Officers

Executives appointed by the board of directors of a corporation, responsible for managing the daily operations and making significant business decisions.

Insiders

Individuals within an organization who possess confidential information, typically due to their position or role within the company.