Which of the Following Statements Is FALSE

question 4

Multiple Choice

Which of the following statements is FALSE?

• A) The variance of a portfolio depends only on the variance of the individual shares.
• B) When the covariance equals 0, the shares have no tendency to move either together or in opposition of one another.
• C) A share's return is perfectly positively correlated with itself.
• D) The closer the correlation is to -1, the more the returns tend to move in opposite directions.

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Definitions:

Differences

The distinctions or variations between two or more entities or items, highlighting how they are not identical.

Short Position

The selling of a stock or other securities not owned by the seller, expecting the price will fall so it can be bought back at a lower price.

Contract Maturity

The specified date on a financial contract when the final payment is made or the contract comes to an end.

Futures Price

The agreed-upon price for a financial instrument or commodity to be delivered and paid for at a future date.