7. Which of the following is an inaccurate statement about capital assets?

a. A state-dependent return on a capital asset is a rate of return in one future scenario (state); expected return is a probability-weighted average of all state-dependent returns possible for an asset, and represents the assets most probable return.

b. Return standard deviation -- the square root of the probability-weighted sum of the deviations of a capital assets state-dependent returns from its expected return -- measures an assets total risk; return variance -- standard deviation squared -- measures the assets unique risk.

c. Covariance and correlation both measure co-movement in the state-dependent returns of a pair of capital assets.