Which of the Following Statements Is False

question 71

Multiple Choice

Which of the following statements is false?

• A) If two stocks move in opposite directions, one will tend to be above average when the other is below average, and the covariance will be negative.
• B) The correlation between two stocks has the same sign as their covariance, so it has a similar interpretation.
• C) The covariance of a stock with itself is simply its variance.
• D) The covariance allows us to gauge the strength of the relationship between stocks.

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Definitions:

Vendor Transaction

A financial or business transaction between a company and its supplier or service provider.

Enter Bills

The process of recording invoices received from vendors in an accounting system.

Receive Payments

The process of collecting money from customers against invoices for goods or services provided.

Accounts Payable

Money owed by a company to its creditors for goods and services that have been delivered but not yet paid for.