Which of the Following Statements Is FALSE

question 31

Multiple Choice

Which of the following statements is FALSE?

• A)While the sign of the correlation is easy to interpret,its magnitude is not.
• B)Independent risks are uncorrelated.
• C)When the covariance equals 0,the returns are uncorrelated.
• D)To find the risk of a portfolio,we need to know more than the risk and return of the component stocks;we need to know the degree to which the stocks' returns move together.

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Definitions:

Elasticities

A measure in economics that shows how much the quantity demanded or supplied of a good responds to changes in price, income, or other factors.

Tax Burden

The measure of taxes that an individual or business must bear, often expressed as a percentage of income or profit.

Legal Assignment

The transfer of a property right or title to some particular benefit, usually from one party to another, under the terms of a legal agreement.

Social Security Tax

A tax that funds the Social Security program, which is levied on both employers and employees to provide financial assistance to retirees, disabled individuals, and survivors.