1. As the number of bonds in a portfolio increases: (a) Unique risk decreases and approaches zero (b) Market risk decreases (c) Unique risk decreases and becomes equal to market risk (d) Total risk decreases and approaches zero 2. If the risk-free rate goes up, how will the optimal risky portfolio change? (a) It will not change, because the risk-free asset isn't considered in the asset allocation or security selection processes (b) It will move to a new portfolio opportunity set, directly above the old one (c) It will move northeast along the portfolio opportunity set (d) It will move southwest along the portfolio opportunity set