2. What is a diversified portfolio? What type of risk is reduced through diversification? How many securities are necessary to achieve this reduction is risk? What characteristics must these securities are necessary to achieve this reduction in risk ?what characteristics must these securities possess ?

7.what is beta coefficient ? what do beta coefficient of 0.5 ,1.0 and 1.5 mean ?

8. If the correlation coefficient for a stock and the market equals 0 , what is the market risk associated with the stock?

9. How are the capital market line and the security market line different? What does each represent ?

10. How does arbitrage pricing theory advance our understanding of security returns?