If the Returns of Two Firms Are Negatively Correlated, Then

question 29

True/False

If the returns of two firms are negatively correlated, then one of them must have a negative beta.

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Definitions:

Dominant Firm

A company with a significant market share or influence, often capable of setting prices within its industry.

Price Leadership Model

A market condition where one leading company sets the price of goods or services, and other companies in the sector follow suit, either explicitly or implicitly.

Oligopolistic Industry

An industry characterized by a small number of large firms dominating the market, often leading to strategic interdependent pricing and production decisions.

Collude

The act of cooperating or conspiring, especially in a deceitful way, between companies to limit competition and manipulate market prices or conditions.