Which of the following statements is FALSE?
A)If investors have homogeneous expectations,then each investor will identify the same portfolio as having the highest Sharpe ratio in the economy.
B)Homogeneous expectations are when all investors have the same estimates concerning future investments and returns.
C)There are many investors in the world,and each must have identical estimates of the volatilities,correlations,and expected returns of the available securities.
D)The combined portfolio of risky securities of all investors must equal the efficient portfolio.

Question

Quizplus · Accepted Answer

Option C is false as it assumes that all investors have identical estimates of the volatilities, correlations and expected returns of available securities, which is unlikely in reality. Different investors may have different estimates based on their risk tolerance, investment goals, and financial knowledge. Homogeneous expectations mean that investors have similar estimates, not identical estimates. Therefore, option C is false.

Which of the Following Statements Is FALSE