Which of the Following Statements Is FALSE

question 68

Multiple Choice

Which of the following statements is FALSE?

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

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Definitions:

Decision Maker's Profit

Reflects the gains realized by a decision maker after considering all costs and revenues associated with their decision.

Expected Monetary Value(EMV)

A financial concept used in decision-making to calculate the average outcome of future events, taking into account the probabilities and impacts of various possible outcomes.

State of Nature

A term referring to the possible outcomes or conditions in decision making that are not under the control of the decision-maker.

Federal Reserve Regulations

Rules set by the Federal Reserve to govern banks and other financial institutions, aiming to ensure the stability and integrity of the financial system.