Which of the Following Statements Is False

question 39

Multiple Choice

Which of the following statements is false?

• A) A stock's return is perfectly positively correlated with itself.
• B) When the covariance equals 0, the stocks have no tendency to move either together or in opposition to one another.
• C) The closer the correlation is to -1, the more the returns tend to move in opposite directions.
• D) The variance of a portfolio depends only on the variance of the individual stocks.

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Definitions:

Compulsion

A repetitive and seemingly purposeful behavior performed in response to an obsession or according to rules that must be rigidly followed.

Ritualized Behaviors

Actions performed in a prescribed manner that are often symbolic and are part of a larger cultural or religious practice.

Disaster

A sudden event, such as an accident or a natural catastrophe, that causes great damage or loss of life.

Obsessive-compulsive Disorder

A mental disorder characterized by unwanted, recurring thoughts and repetitive behaviors that the individual feels compelled to perform.