Risk and Return. True or false? Explain or qualify as necessary. a. The expected rate of return

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Risk and Return. True or false? Explain or qualify as necessary.

a. The expected rate of return on an investment with a beta of 2 is twice as high as the expected rate of return of the market portfolio.

b. The contribution of a stock to the risk of a diversified portfolio depends on the market risk of the stock.

c. If a stock’s expected rate of return plots below the security market line, it is underpriced.

d. A diversified portfolio with a beta of 2 is twice as volatile as the market portfolio.

e. An undiversified portfolio with a beta of 2 is twice as volatile as the market portfolio.

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