If a Stock's Returns Are Volatile, Then the Stock

question 103

Multiple Choice

If a stock's returns are volatile, then the stock:

• A) cannot be considered a negative risk asset.
• B) can still be considered a negative risk asset.
• C) has macro risk, but no unique risk.
• D)does not offer diversification potential.

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Definitions:

Correlation

A statistical measure that describes the extent to which two variables change together, but does not necessarily imply causation.

Cause-And-Effect

The principle that an action or event will produce a certain response or effect in the form of another event.

Negative Correlation

A relationship between two variables where one variable increases as the other decreases, and vice versa.

Computer Technology

The use of computers and software to manage information, including the development, maintenance, and use of computer systems, software, and networks for processing and distributing data.