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.