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:

Two-Way Avoidance

A learning process in which an animal or human learns to avoid a negative stimulus by performing a particular behavior.

Unpleasant Situation

A scenario or condition that is not enjoyable or is likely to cause discomfort, distress, or dissatisfaction.

Escape

A behavioral response aimed at getting away from a threatening or uncomfortable situation or stimulus.

Escape Response

A behavioral reaction aimed at moving away from an unpleasant or harmful stimulus, often considered a basic survival instinct.