solution
solution.
Which statement is TRUE regarding diversification?
O The greater the systematic risk, the greater the return required by the investor.
O The greater the diversifiable risk, the greater the return required by the investor.
O We are able to remove all systematic risk if enough stocks are added to a portfolio.
O Systematic risk is diversifiable.
O None of the above
A particular asset has a beta of 2 and an expected return of 19%. The expected return on the market portfolio is 10% and the risk-free is 3%. Which of the following statement is correct?
O This asset is fairly priced
O This asset is underpriced
O This asset is overpriced
O Cannot tell from the given information
O None of the above
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