An inaccurate statement about capital assets

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Reference no: EM131558567

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 asset’s most probable return.

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

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

Reference no: EM131558567

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