With a positive amount invested in each stock the more the


Which of the following statements is FALSE?

A. With a positive amount invested in each stock, the more the stocks move together and the higher their covariance or correlation, the more volatile the portfolio will be.

B. Stocks in the same industry tend to have more highly correlated returns than stocks in different industries.

C. Stock returns will tend to move together if they are affected similarly by economic events.

D. Almost all of the correlations between stocks are negative, illustrating the general tendency of stocks to move together.

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Financial Management: With a positive amount invested in each stock the more the
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