Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which statement is NOT true regarding the Capital Market Line (CML)?

The CML represents portfolios that optimally combine risk and return for efficient portfolios.

Portfolios on the CML are considered to be efficient portfolios.

The CML applies to all portfolios, including those that are not fully diversified.

The slope of the CML is determined by the market risk premium divided by the standard deviation of the market portfolio.

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Verified step by step guidance

Understand the concept of the Capital Market Line (CML): The CML is a graphical representation of the risk-return tradeoff for efficient portfolios, which are portfolios that are fully diversified and lie on the efficient frontier.

Clarify the characteristics of portfolios on the CML: Portfolios on the CML are considered efficient because they optimally combine risk and return. These portfolios are fully diversified, meaning they eliminate unsystematic risk.

Analyze the statement 'The CML applies to all portfolios, including those that are not fully diversified': This statement is incorrect because the CML specifically applies to efficient portfolios that are fully diversified. Portfolios that are not fully diversified do not lie on the CML.

Understand the slope of the CML: The slope of the CML is determined by the market risk premium (expected return of the market portfolio minus the risk-free rate) divided by the standard deviation of the market portfolio. This represents the tradeoff between risk and return for efficient portfolios.

Review the correct answer: The statement 'The CML applies to all portfolios, including those that are not fully diversified' is NOT true because the CML is relevant only for efficient portfolios that are fully diversified.