Which of the following statements is FALSE?
A) While the sign of a correlation is easy to interpret, its magnitude is not.
B) Independent risks are uncorrelated.
C) When the covariance equals 0, the returns are uncorrelated.
D) To find the risk of a portfolio, we need to know more than the risk and return of the component stocks; we need to know the degree to which the stocks' returns move together.

Question

Quizplus · Accepted Answer

The magnitude of a correlation coefficient, which ranges from -1 to 1, provides a measure of the strength of the relationship between two variables, making it interpretable.

Which of the Following Statements Is FALSE