18. If a security plots above the security market line (SML),

A. it's considered to be a poor purchase because it is overpriced.

B. it's considered to have a high degree of risk in relation to the market average.

C. it's considered to be a good purchase because it is underpriced.

D. it's considered to have low degree of risk in relation to the market average.

19. The U.S. Treasury bill is yielding 3.28 percent and the market has an expected return of 12.5 percent. What's the Sharpe ratio of a portfolio that has a beta of 1.53 and a variance of .036512?

A. .87

B. .79

C. .74

D. .83

20. Which one of the following is eliminated, or at least greatly reduced, by increasing the number of individual securities held in a portfolio?

A. Non-diversifiable risk

B. Various expected returns caused by changing economic states

C. Diversifiable risk

D. Number of economic states