Which of the Following Statement(s) Is(are) False Regarding the Variance

question 25

Multiple Choice

Which of the following statement(s) is(are) false regarding the variance of a portfolio of two risky securities?
I.The higher the coefficient of correlation between securities, the greater the reduction in the portfolio variance.
II. There is a linear relationship between the securities' coefficient of correlation and the portfolio variance.
III. The degree to which the portfolio variance is reduced depends on the degree of correlation between
Securities.

• A) I only
• B) II only
• C) III only
• D) I and II
• E) I and III

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Definitions:

One-sample Chi-square

A statistical test that assesses the goodness-of-fit between observed frequencies and expected frequencies in one categorical variable.

One-sample Chi-square Test

A statistical test used to determine if the distribution of categorical variables differs from a hypothesized distribution.

Fisher's Exact Test

A statistical significance test used for small sample sizes, comparing proportions in a 2x2 contingency table.

Chi-square Statistic

A measure used in statistics to test the independence of two events.