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:

Celler-Kefauver Act

A U.S. law, enacted in 1950, designed to prevent anti-competitive mergers and acquisitions by closing loopholes in earlier antitrust legislation.

Competition

The economic rivalry among businesses trying to achieve higher sales, profits, and market share by offering the best possible terms to customers.

Real Assets

Physical, tangible assets such as land, buildings, machinery, or commodities that have intrinsic value due to their substance and properties.

Clayton Act

A U.S. antitrust law, enacted in 1914, aimed at promoting fair competition and preventing unfair business practices.