1. Which of the following is true?

A. Total risk decreases as the number of stocks in a portfolio increases

B. Market risk decreases as the number of stocks in a portfolio increases

C. Diversifiable risk increases as the number of stocks in a portfolio increases

D. Firm specific risk increases as the number of stocks in a portfolio increases

2. Assume the risk-free rate is 3% and the market risk premium is 5%. What is the required rate of return for a company with a beta of 2?

A. 13%

B. 10%

C. 11%

D. 8%

Thank you in advance!!