Which of the Following Statements Is FALSE

question 13

Multiple Choice

Which of the following statements is FALSE?

• A)To find the risk of a portfolio, we need to know more than the risk and return of the component shares; we need to know the degree to which the shares' returns move together.
• B)While the sign of the correlation is easy to interpret, its magnitude is not.
• C)When the covariance equals 0, the returns are uncorrelated.
• D)Independent risks are uncorrelated.

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Definitions:

Promise Under Seal

A formal commitment or contract that is legally binding because it is physically sealed, representing a solemn promise.

Equitable Estoppel

A legal principle preventing a party from denying facts if their own actions have led another to perceive those facts as true.

Legal Obligation

A duty enforced by law, requiring an entity or individual to conform to certain actions or refrain from certain acts.

Written Promise

A written document where one party agrees to perform or refrain from specific actions.