Question

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.

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.