Which of the Following Statements Is False

question 35

Multiple Choice

Which of the following statements is false?

• A) The covariance and correlation allow us to measure the co-movement of returns.
• B) Correlation is the expected product of the deviations of two returns from their means.
• C) Because the prices of the stocks do not move identically, some of the risk is averaged out in a portfolio.
• D) The amount of risk that is eliminated in a portfolio depends on the degree to which the stocks face common risks and their prices move together.

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