Which of the Following Statements Is FALSE

question 97

Multiple Choice

Which of the following statements is FALSE?

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

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Definitions:

Basis-of-the-Bargain Requirement

A legal principle emphasizing that a statement must have been a part of the reason a party was induced into a contract for it to be considered as warrantable.

Catalog

A systematic list of items, which may include books, products, or collections, usually with descriptive details.

Caveat Emptor

A Latin phrase meaning "let the buyer beware," indicating that the buyer assumes the risk about the quality of the goods being purchased.

Implied Warranty of Fitness

A legal doctrine that suggests that when a seller knows the specific purpose for which an item is purchased, the item is guaranteed to be fit for that particular purpose.