Which of the Following Statements Is False

question 99

Multiple Choice

Which of the following statements is false?

• A) The expected return of a portfolio is equal to the weighted average expected return, but the volatility of a portfolio is less than the weighted average volatility.
• B) Each security contributes to the volatility of the portfolio according to its volatility, scaled by its covariance with the portfolio, which adjusts for the fraction of the total risk that is common to the portfolio.
• C) Nearly half of the volatility of individual stocks can be eliminated in a large portfolio as a result of diversification.
• D) The overall variability of the portfolio depends on the total co-movement of the stocks within it.

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Definitions:

Sales Revenue

The total amount earned by a company from its sales of goods or services, before any deductions for returned goods and allowances.

Gross Profit Rate

A financial ratio that compares gross profit to net sales, indicating the efficiency of production and pricing.

Operating Expenses

Expenses incurred from normal business operations such as manufacturing costs, marketing fees, and office supplies.

Sales Revenue

Income generated from selling goods or services over a period, critical for determining a company's profitability.