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.

Question

Quizplus · Accepted Answer

The variance of a portfolio depends not only on the variance of the individual stocks but also on the covariance between the stocks.

Which of the Following Statements Is FALSE