1. The standard deviation of market portfolio returns is 15%. The beta of a mutual fund is 1.5. Can the standard deviation of mutual fund's returns be 20%?

a. Yes b. No

2. The risk-free rate is 2%. The of stock 1 is 0.8 while its is 15%. The beta of stock 2 is 1.6 while its is 45%. Which of the following statements is true in equilibrium?

a. The risk premium of stock 2 would be three times the risk premium of stock 1.

b. The risk premium of stock 2 would be twice as much as the risk premium of stock 1.

c. The expected return of stock 2 would be three times the risk premium of stock 1.

d. The expected return of stock 2 would be twice as much as the risk premium of stock 1.

Ecient portfolios of risky securities a. have highest utilities b. have highest expected returns for various standard deviations c. have lowest standard deviations for various expected returns d. have highest reward to volatility ratios