Which of the Following Statements Is FALSE

question 77

Multiple Choice

Which of the following statements is FALSE?

• A)The variance of a portfolio is equal to the weighted average correlation of each stock within the portfolio.
• B)The variance of a portfolio is equal to the sum of the covariances of the returns of all pairs of stocks in the portfolio multiplied by each of their portfolio weights.
• C)The variance of a portfolio is equal to the weighted average covariances of each stock within the portfolio.
• D)The volatility declines as the number of stocks in a portfolio grows.

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Definitions:

Subscription Price

The cost that investors pay to acquire securities during an offering before they are available on the open market.

Rights-On Period

A specific time frame during which shareholders have the right to buy additional shares at a predetermined price before the offer is open to others.

Common Share Price

The market price at which a company's common stock is traded on the stock exchange.

Direct Costs

Expenses that can be directly traced to the production of a specific good or service, such as materials and labor.