Which of the Following Statements Is False

question 105

Multiple Choice

Which of the following statements is false?

• A) The variance of a portfolio is equal to the weighted average correlation of each stock within the portfolio.
• B) The variance of a portfolio is equal to the sum of the covariances of the returns of all pairs of stocks in the portfolio multiplied by each of their portfolio weights.
• C) The variance of a portfolio is equal to the weighted average covariances of each stock within the portfolio.
• D) The volatility declines as the number of stocks in a portfolio grows.

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