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Which of the following statements are FALSE? The CAPM identifies the market portfolio as...

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Finance

Which of the following statements are FALSE?

  1. The CAPM identifies the market portfolio as the efficient portfolio.
  2. If some security were not part of the efficient portfolio, then every investor would want to own it, and demand for this security would increase causing its expected return to fall until it is no longer an attractive investment.
  3. If investors have homogeneous expectations, then each investor will identify the same portfolio as having the highest Sharpe ratio in the economy.
  4. The market portfolio contains more of the smallest stocks and less of the larger stocks.

III and IV only

I and II only

I and III only

II and IV only

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