1.

Which of the following statements are CORRECT about the CAPM?

[I]: Investors have the same market portfolio (optimal risky portfolio).

[II]: Investors may have different optimal complete portfolios according to their risk aversions.

[III]: The market portfolio has a beta of one.

[IV]: Investors' optimal complete portfolios have the same Sharpe ratio.

Select one:

a. [II] and [IV] only.

b. [I], [II], [III], and [IV].

c. [I], [II], and [III] only.

d. [I] and [II] only.

e. [I] and [III] only.

2.

Under the CAPM, which statement is NOT true regarding the capital market line (CML)?

Select one:

a. The CML is the best attainable capital allocation line (CAL).

b. The slope of the CML is positive.

c. The CML is the line from the risk-free rate through the market portfolio.

d. The CML describes the relationship between expected return and standard deviation for all assets.

e. The CML is resulted from the market equilibrium.