1. Which of the following statements is correct? Check all that apply. O Possible sources of market or non-diversifiable risk include inflation and commodity price changes, changes in currency exchange rates, and fluctuations in interest rates. O The practice of diversification can effectively reduce an investor's company-specific risk. A investor's exposure to market risk can be diversified away by holding approximately 40 randomly-selected securities in an investor's portfolio. 2. The phenomena and behaviors discussed above are based on the assumption that the majority of investors are risk averse. According to the concept of risk aversion, Check all that apply. An investor will assess the riskiness of a security, and then determine his or her appropriate rate of return. An investor will assess the rate of return offered by a security, and then determine the corresponding riskiness of the security. 3. Which statement is correct? It is theoretically possible to create a portfolio that offers a positive return and whose standard deviation is zero. The addition of an asset to a portfolio, when the correlation coefficient between the asset's and portfolio's returns is +1, will reduce the riskiness of the portfolio. The addition of an asset to a portfolio, when the correlation coefficient between the asset's and portfolio's returns is -1, will increase the riskiness of the portfolio. O It is theoretically impossible to create a portfolio that offers a positive return and standard deviation of zero