Which of the Following Statements Is False

question 66

Multiple Choice

Which of the following statements is false?

• A) Dividing the covariance by the volatilities ensures that correlation is always between -1 and +1.
• B) Volatility is the square root of variance.
• C) The closer the correlation is to 0, the more the returns tend to move together as a result of common risk.
• D) If two stocks move together, their returns will tend to be above or below average at the same time, and the covariance will be positive.

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Definitions:

Financing Activities

Transactions related to funding the company, including issuing equity, borrowing loans, or paying dividends.

Investing Activities

Investing activities involve the purchase and sale of long-term assets and other investments, not including cash equivalents, reflected in the cash flow statement of a company.

Statement Of Cash Flows

A report that captures the effects of changes in balance sheet accounts and income on the availability of cash and cash equivalents.

Equipment

Tangible property other than land or buildings that is used in operations of a business, such as machinery or office furniture.