4. Other things held constant, if investors become more risk averse, the Security Market Line (SML) would (4 points) a. have steeper slope. b. have less steep slope. c. keep same slope. 5. Inflation, recession, and high interest rates are economic events which are characterized as (4 points) a. Company-specific risk that can be diversified away. b. Market risk that can be diversified away. c. Systematic risk that cannot be diversified away. d. Unsystematic risk that cannot be diversified away. 6. Which of the following statements is correct? (4 points) a. The slope of the security market line is measured by beta. b. Two securities with the same exposure to market risk will have the same betas. c. Idiosyncratic risk cannot be diversified away. d. A stock's beta measures its idiosyncratic risk. e. None of the above is correct. 7. Which type of risk that is associated with investments can be diversified away under the right conditions? (4 points) a. systematic risk b. market risk c. inflation risk d. idiosyncratic risk e. more than one of the above risks can be diversified away