Which of the Following Statements Is FALSE

question 84

Multiple Choice

Which of the following statements is FALSE?

• A)The closer the correlation is to -1, the more the returns tend to move in opposite directions.
• B)A share's return is perfectly positively correlated with itself.
• C)The variance of a portfolio depends only on the variance of the individual shares.
• D)When the covariance equals 0, the shares have no tendency to move either together or in opposition of one another.

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Definitions:

Imperfect Competition

A market structure where the conditions of perfect competition are not met, characterized by a heterogeneous product or a limited number of sellers.

Price Takers

Companies or individuals who accept the prevailing prices in the market because they do not have enough market power to influence the price of an item themselves.

Compete

The act of entities or individuals striving against others for a common objective, such as market share or victory in a game.

Monopolistic Competition

A market structure in which many companies sell products that are substitutes for each other but not perfect substitutes, thus combining elements of monopoly and perfect competition.