1s. Unsystematic risk: through portfolio diversification. is. is compensated for by the risk premium C. is measured by beta. D. cannot be avoided if you wish to participate E is related to the overall economy. in the financial markets. 16. Which one of the following would indicate a portfolio is being effectively diversified A. an increase in the portfolio beta IB. a decrease in the portfolio beta C. an increase in the portfolio rate of return D. an increase in the portfolio standard deviation E. a decrease in the portfolio standard deviation 17, A. B. A stock with an actual return that lies above the security market line has: more systematic risk than the overall market. more risk than warranted based on the realized rate of return. C. yielded a higher return than expected for the level of risk assumed. D. less systematic risk than the overall market. E. yielded a return equivalent to the level of risk assumed. 18. According to the capital asset pricing model, the expected return on a security is A. negatively and non-linearly related to the security's beta. B. negatively and linearly related to the security's beta. C. positively and linearly related to the security's variance. D. positively and non-linearly related to the security's beta. E. positively and linearly related to the security's beta. 19. As we add more diverse securities to a portfolio, the_risk of the portfoli decrease while the A. total; unsystematic B. systematic; unsystematic C. total; systematic D. systematic; total E. unsystematic; total risk will not