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Question 2 : Which of the following statements is false? A significant fraction of investors might...

Question 2 : Which of the following statements is false?

A significant fraction of investors might care about aspects of their portfolios other than expected return and volatility, and so would be unwilling to hold inefficient investment portfolios.

Although the true market portfolio of all invested wealth might be efficient, the proxy portfolio might not track the actual market very well.

We might be using the wrong proxy portfolio when we calculate alphas.

The true market portfolio consists of all traded investment wealth in the economy.

None of the above
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Answer #1

Statement about significant fraction of investors might care about aspects of their portfolios other than expected return and volatility and they would be unwilling to hold insufficient investment portfolios is completely incorrect because investors are caring about expected return & volatility and they will be also willing to hold insufficient investments portfolio.

all the other statements except statement (a) are true in nature because they are stating true facts

Correct answer will be option (A)a significant portion of investor might hear about aspect of their portfolios other than expected return and volatility and so would be unwilling to hold inefficient portfolio.

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