Which of the Following Statements Is False

question 71

Multiple Choice

Which of the following statements is false?

• A) If two stocks move in opposite directions, one will tend to be above average when the other is below average, and the covariance will be negative.
• B) The correlation between two stocks has the same sign as their covariance, so it has a similar interpretation.
• C) The covariance of a stock with itself is simply its variance.
• D) The covariance allows us to gauge the strength of the relationship between stocks.