Which of the Following Statements Is False

question 69

Multiple Choice

Which of the following statements is false?

• A) Stock returns will tend to move together if they are affected 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 invested 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:

DOI

Stands for "Diffusion of Innovation," which is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures.

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Inventory

The raw materials, work-in-process, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

Accounts Payable

Money owed by a company to its creditors for goods and services that have been received but not yet paid for.