1. What kind of event risk is associated with commodities? Commodities:

a. tend to have positive event risk because of unexpected reduction in the supply of a commodity

b. tend to have negative event risk because supply levels are easily predicted

c. tend to have negative event risk because their returns are negatively correlated with stock returns

d. are not exposed to event risk like stocks or bonds

2. We know that Diversification Return = Geometric Mean Return - Strategic Return.

a. The diversification return then might be argued to serve as a measure of the added geometric return that diversification and/or rebalancing can generate through the reduction of risk caused by assembling imperfectly correlated risky assets into a portfolio.

b. Strategic return is never used as a hypothetical benchmark for evaluating portfolios actual geometric mean returns.

c. The strategic return can be obtained through any portfolio rebalancing of the underlying assets.

d. The strategic return is a key concept in diversification return and it has very clear economic meaning.