Which of the Following Statements Is False

question 7

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:

Perceptual Errors

Mistakes in judgment or interpretation made by individuals due to subjective biases, misleading appearances, or incorrect information.

Perception Influences

Factors that affect how individuals interpret and make sense of their sensory experiences.

Recognizing

The act of identifying or acknowledging the existence or truth of something.

Environment

The surrounding conditions in which a person, animal, or plant lives or operates.