Which of the Following Statements Is FALSE

question 97

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.
• 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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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of consumers to price changes.

Economic Well-being

The state in which individuals or societies can satisfy their needs and desires, often measured by income, employment, and access to resources.

Taxes Affect

Describes how taxes influence economic decisions and behaviours of individuals and businesses, including consumption, investment, and savings.

Labor Supply

The total hours that workers are willing and able to work at a given wage rate, within an economy.