1.The CAPM model implies that investors should only be compensated for bearing systematic risk. Systematics risk is a function of beta and the variance of market returns. T or F + brief explain

2.The term Mental Accounting in Behavioural Finance means investors tend to use a small sample of data to draw conclusions. T or F + brief explain

3. Lucas heard some good news about Company A when chatting with his friends and invested $20,000 immediately. Two weeks later, the same news heard by Lucas was announced by the company but Lucass return during this period was negative. The financial market where Lucas is trading at must be inefficient. T or F + brief explain

4. Bond A matures in 5.5 years, has a modified duration equal to 5 years, and a yield equal to 10%. As its modified duration is lower than its maturity, we conclude Bond A must be a coupon bearing bond. T or F + brief explain

5. During the contraction period of a business cycle, defensive industries should be preferred under the notion of sector rotation. T or F + brief explain