1.Which of the following statements is FALSE?

a.Only aggressive investors will choose to hold the portfolio of risky assets, the tangent or efficient portfolio.

b.An investor's preferences will determine only how much to invest in the tangent or efficient portfolio versus the risk-free investment.

c.Aggressive investors will invest more in the tangent portfolio choosing a portfolio that is near the tangent portfolio or even beyond it by buying stocks on margin.

d.Conservative investors will invest a small amount in the tangent or efficient portfolio, choosing a portfolio on the line near the risk-free investment

2.Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%. Security "X" goes up on average by 29% when the market goes up and goes down by 11% when the market goes down. Security "Y" goes down on average by 16% when the market goes up and goes up by 16% when the market goes down. Security "Z" goes up on average by 4% when the market goes up and goes up by 4% when the market goes down.

The expected return on security "Y" is closest to:

		15%
		10%
		0%
		4%