Which of the Following Statements Is FALSE

question 71

Multiple Choice

Which of the following statements is FALSE?

• A) Almost all of the correlations between shares are negative, illustrating the general tendency of shares to move together.
• B) With a positive amount invested in each share, the more the shares move together and the higher their covariance or correlation, the more variable the portfolio will be.
• C) Shares' returns will tend to move together if they are affected similarly by economic events.
• D) Shares in the same industry tend to have more highly correlated returns than shares in different industries.

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are accessible to all without diminishing availability to others, such as public parks or national defense.

Ability-To-Pay Philosophy

A principle that asserts taxes should be levied based on an individual's or entity's capacity to pay, implying those with higher income or wealth should pay more in taxes.

Progressive Income Tax

A tax system in which the tax rate increases as the taxable income increases, imposing higher rates on those with higher incomes.

Taxation

The process by which a government levy charges on citizens or corporate entities to finance government spending and activities.