Which of the Following Statements Is False

question 62

Multiple Choice

Which of the following statements is false?

• A) Stock returns will tend to move together if they are affect similarly by economic events.
• B) Stocks in the same industry tend to have more highly correlated returns than stocks in different industries.
• C) Almost all of the correlations between stocks are negative, illustrating the general tendency of stocks to move together.
• D) With a positive amount invest in each stock, the more the stocks move together and the higher their covariance or correlation, the more variable the portfolio will be.

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Definitions:

Static Budget

A fixed budget based on a specific level of activity and does not change with the actual level of activity.

Favorable Differences

Variations between budgeted and actual figures that are advantageous to the company, indicating better performance or savings.

Unfavorable Differences

Variances that occur when actual costs are higher than the budgeted or standard costs, often considered as negative variances.

Relevant Range

The range of the activity index over which the company expects to operate during the year.