1. The primary purpose of portfolio diversification is to:

A. eliminate systematic risk.

B. increase returns and risks.

C. eliminate all risks.

D. lower both returns and risks.

E. eliminate unsystematic risk.

2. Oil Well Supply offers 7.5 percent coupon bonds with semiannual payments and a yield to maturity of 10.18 percent. The bonds mature in 6 years. What is the market price per bond if the face value is $1,000?

A. $932.18

B. $881.83

C. $1,212.52

D. $721.43

E.$565.72