Which of the Following Statements Is Correct

question 72

Multiple Choice

Which of the following statements is correct?

• A)For a few firms in completely different industries, it is possible to have a correlation that approaches -2.0.
• B)A correlation of -1.0 means that the two firms are uncorrelated or that they have no relationship.
• C)Most common stocks have low correlation with each other since they operate in different industries.
• D)None of these statements is correct.

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Definitions:

Capital Assets

Long-term property owned for investment or personal purposes, including stocks, bonds, real estate, and equipment.

IRC

The Internal Revenue Code, which is the comprehensive set of tax laws created by the Internal Revenue Service in the United States.

Personal or Investment Purposes

The intention behind acquiring or using property, either for personal enjoyment or to generate income or profit.

Preferential Tax Rates

Lower tax rates applied to specific types of income, such as capital gains or qualified dividends, which are taxed at a different rate than ordinary income.