1. Is the standard deviation of a portfolio of two assets the weighted average of the standard deviations of the two assets? Explain. (Hint: consider correlation) 2. Explain the relative importance of variance and co-variance in portfolios of different sizes. 3. What happens when a risk-free asset is added to a portfolio of risky assets? 4. Can the risk (and expected return) of a portfolio be increased using the risk free asset? 5. What does the Efficient Frontier depict? 6. How would you determine the optimal portfolio among the efficient set of risky assets? 7. Are all feasible combinations of assets efficient? Explain. 8. Differentiate between systematic and idiosyncratic risk. 9. If we increase the number of securities in a portfolio, what happens to the standard deviation of the portfolio? 10. Can all risk be diversified away in a portfolio