Which of the Following Statements Is Correct

question 12

Multiple Choice

Which of the following statements is correct?

• A) Uncorrelated assets have a correlation of −1.0.
• B) Most common stocks are positively correlated with each other because they are impacted by the same economic factors.
• C) We can typically add many stocks together to fully eliminate the market risk in a portfolio.
• D) None of these choices are correct.

---

Definitions:

EPS

Earnings Per Share - a financial metric calculating the portion of a company's profit allocated to each outstanding share of common stock, indicating a company's profitability.

Intrinsic Value

The actual value of a company, asset, or currency, based on underlying perception of its true value including all aspects of the business.

ROE

Return on Equity indicates a company's return from shareholder investments by showcasing the profit made from each dollar invested by shareholders.

Required Return

The minimum expected return an investor demands for holding a particularly risky investment, influenced by the risk-free rate and the risk premium.