Which of the Following Statements Is False

question 60

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:

Rush

A spasm of warmth and ecstasy that occurs when certain drugs, such as heroin, are ingested.

Heroin

An illegal opioid drug derived from morphine, highly addictive and known for its powerful euphoric effects.

Injection

The act of administering a liquid, especially a drug, into the body using a needle and syringe.

Barbiturates

A class of drugs used as sedatives and hypnotics, historically prescribed for anxiety, insomnia, and seizure disorders, now less common due to the risk of dependence.