31&32)

35)

37)

46)

31) As you add more stocks to a portfolio: (1 pts) specific risk at first falls, then rises. O market risk is increasingly diversified away. o specific risk is increasingly diversified away. O market risk declines but specific risk rises. O All of the above 32) Individual stocks are: (1 pts) O exposed to the same amount of market risk exposed to differering amounts of market risk not exposed to market risk; only the general economy is subject to market risk exposed to differing amounts of market risk but the same amount of specific risk O All of the above (1 pts) 35) In theory, the "market portfolio" should contain: the securities of the S&P 500 the securities of the Dow the securities of the S&P 500 and Treasury bills. all risky assets O None of the above (1 pts) 37) What should you recommend to an investor who is considering an investment that plots below the security market line? Invest; The expected return is high relative to the risk. Invest; All stocks revert to the SML over time. Don't invest; All stocks below the SML are low-growth stocks. Don't invest; The risk is high relative to the expected return. (ipts) 46) The company cost of capital is the return that is expected on a portfolio of the company's: O existing securities equity securities O debt securities proposed securities None of the above