Biology Forums - Study Force

Which of the following statements is FALSE?
A) A portfolio is efficient if it has the highest possible Sharpe ratio; that is it is efficient if it provides the largest increase in expected return possible for a given increase in volatility.
B) The required return for an investment is equal to a risk premium that is equal to the risk premium of the investor's current portfolio scaled by  .
C) Increasing the investment in investment I will increase the Sharpe ratio of portfolio P if its expected return E[Ri] exceeds the required return ri, which is given by ri = rf +   × (E[Rp] - rf).
D) If a security i's expected return is less than the required return ri, we should reduce our holding of security i.

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Thanks for helping with my corporate finance course