Which of the Following Statements Is FALSE

question 57

Multiple Choice

Which of the following statements is FALSE?

• A)The volatility declines as the number of stocks in a portfolio grows.
• B)An equally weighted portfolio is a portfolio in which the same amount is invested in each stock.
• C)As the number of stocks in a portfolio grows large,the variance of the portfolio is determined primarily by the average covariance among the stocks.
• D)When combining stocks into a portfolio that puts positive weight on each stock,unless all of the stocks are uncorrelated with the portfolio,the risk of the portfolio will be lower than the weighted average volatility of the individual stocks.

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Definitions:

Radio Waves

Electromagnetic waves with wavelengths longer than infrared light, used in communication systems for broadcasting, radar, and satellite transmissions.

Magnetic Fields

Invisible fields that exert a force on objects that are magnetic in nature or moving electrical charges.

Neuron

The basic cell that makes up the nervous system and that receives and sends messages within that system.

Soma

The cell body of the neuron responsible for maintaining the life of the cell.