Which of the Following Statements Is FALSE

question 28

Multiple Choice

Which of the following statements is FALSE?

• A) Because the prices of shares do not move identically, some of the risk is averaged out in a portfolio.
• B) Correlation is the expected product of the deviations of two returns.
• C) The covariance and correlation allow us to measure the co-movement of returns.
• D) The amount of risk that is eliminated in a portfolio depends on the degree to which the shares face common risks and their prices move together.

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