Which of the Following Statements Is False

question 60

Multiple Choice

Which of the following statements is false?

• A) The volatility declines as the number of stocks in a portfolio grows.
• B) An equally weighted portfolio is a portfolio in which the same amount is invested in each stock.
• C) As the number of stocks in a portfolio grows large, the variance of the portfolio is determined primarily by the average covariance among the stocks.
• D) When combining stocks into a portfolio that puts positive weight on each stock, unless all of the stocks are uncorrelated with the portfolio, the risk of the portfolio will be lower than the weighted average volatility of the individual stocks.

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Definitions:

Platt Amendment

was a 1901 amendment to the Cuban Constitution that allowed the United States to intervene in Cuba's affairs and also established a permanent American naval base in Guantanamo Bay.

Vocational Training

Education that prepares individuals for specific trades, crafts, and careers at various levels from a trade, a craft, technician, or a professional position.

American Expansionism

The policy or practice of the United States in extending its territory through acquiring land or exerting influence, evident in the 19th and early 20th centuries.

Rough Riders

A volunteer cavalry regiment commanded by Theodore Roosevelt during the Spanish-American War, noted for their diverse backgrounds and bravery.