Which of the Following Statements Is FALSE

question 95

Multiple Choice

Which of the following statements is FALSE?

• A)Shares' returns will tend to move together if they are affected similarly by economic events.
• B)Almost all of the correlations between shares are negative, illustrating the general tendency of shares to move together.
• C)With a positive amount invested in each share, the more the shares move together and the higher their covariance or correlation, the more variable the portfolio will be.
• D)Shares in the same industry tend to have more highly correlated returns than shares in different industries.

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Definitions:

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of numerical data from its mean.

Zero Standard Deviation

A statistical measure indicating that all values within a data set are identical.

Risk-Free Asset

A financial instrument that is considered to have no risk of financial loss, typically government bonds.

Standard Deviation

A statistic that measures the dispersion or variability of a set of data values around the mean (average) of those values.