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1.
An efficient portfolio is likely to consistently beat the market.
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False. Efficient portfolios are not likely to beat the market.
2.
If you invest in a portfolio at the bottom of the efficient frontier curve, the portfolio has _______.
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Low returns and low risk. The bottom of the efficient frontier involves low risk and low return.
3.
What assumption does Modern Portfolio Theory make regarding risk?
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Investors want to avoid unnecessary risk. The theory seeks the maximum return on a low level of risk.
4.
If an investor is not afraid of taking risks, he or she is risk-averse.
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False. Risk-averse people are, to varying extents, wary of risk and do not invite it.
5.
The risk of a portfolio asset being affected by market changes is called systematic risk.
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True. The risk of a portfolio asset being affected by market changes is called systematic risk.