Question

Which of the following statements is false? Question 11 options: a The portfolio that contains all...

Which of the following statements is false?

Question 11 options:

a

The portfolio that contains all shares of all stocks and securities in the market is called the efficient portfolio.

b

Systematic risk cannot be eliminated through diversification.

c

A portfolio that contains only systematic risk is called an efficient portfolio.

d

Volatility measures total risk, while beta measures only systematic risk.

e

None of the above.

Homework Answers

Answer #1

The portfolio that contains all shares of all stocks and securities in the market is called the efficient portfolio.

Statement a is False.

An efficient portfolio is the one that maximizes the return for a given level of risk or minimizes risk for a given expected return.

Below statements are true:

  • Systematic risk cannot be eliminated through diversification. Only unsystematic risk can be diversified away.
  • An efficient portfolio contains only systematic risk, and unsystematic risk is diversified away.
  • Volatility measures total risk. Beta measures only systematic risk.
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