Which of the following statements is$$ FALSE?

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Part $1$

A$.$

Independent risks are uncorrelated.

B$.$

While the sign of a correlation is easy to$$ interpret, its magnitude is not.

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.

Stocks tend to move together if they are affected by$\_\_\_\_\_\_\_\_.$Question content area top

Part $1$

As we add more uncorrelated stocks to a portfolio where the stocks are held in equal$$ weights, the benefit of diversification is most dramatic$\_\_\_\_\_\_\_\_.$

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Part $1$

A$.$

when there are more than$1,000$ stocks

B$.$

at the outset

C$.$

after $20$ stocks have been added

D$.$

when there are more than $500$ stocks

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Part $1$

A$.$

company specific events

B$.$

common economic events

C$.$

events unrelated to the economy

D$.$

idiosyncratic shocks