Evaluate whether the following statements are true or false. a)Even if a risky s

Question

Evaluate whether the following statements are true or false.

a)Even if a risky security has a return lower than the risk-free rate, this security could be held for diversification purposes.

b)The Glass-Steagall Act of 1933 separated commercial banking from investment banking

c)If returns on two stocks are perfectly positively correlated, you can build a riskless portfolio with those stocks when short-selling is not allowed.

d)A risk-free security has a variance of zero.

e)A security with a beta of zero is risk free.

f)The CAPM implies that investors demand high returns for holding securities with low betas.

g)If a stock lies above the securities market line, it is overvalued.

h)There is an overwhelming majority of evidence against market efficiency: if you find a profitable trading strategy, you immediately tell the world how to trade.

i)The small firm in January effect is strongest at the beginning of the month.

j)When a risk-free asset is available, the minimum variance portfolio is the optimal portfolio for all risk-averse investors.

Explanation / Answer

a]. true

b]. false

c]. true

d].true

e].false

f].true

g].false

h].false

i].true

j].false

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