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:

Average Revenue

The amount of money received by a firm per unit of output sold.

Average Variable Cost

The total variable costs divided by the quantity of output, representing the variable cost per unit of output produced.

Average Total Cost

The total cost of production divided by the total output or quantity produced, indicating the cost per unit of output.

Average Fixed Cost

The fixed costs of production (costs that do not change with the amount of output) divided by the quantity of output produced.