1. With respect to the security market line (SML), if two risky assets have the same covariance with the market portfolio, will the two assets most likely have the same:

A. Different beta and different Expected return (required) rate of return

B. Different beta and same Expected return (required) rate of return

C. Same beta and different Expected return (required) rate of return

D. Same beta and same Expected return (required) rate of return

2. Under capital asset pricing model (CAMP), which portfolio do investors expect to gain higher return from holding?

	Portfolio A	Portfolio B
Systematic risk (beta) Specific risk for each individual security	1.0 High	1.0 Low

A. Portfolio A

B. Portfolio B

C. A and B are same expected return

D. Cannot determine