4) systematic risk Which of the following statements best describes the principle of diversification A) Concentrating an investment in two or three stocks will eliminate all of the B) Sprencting an investment across multiple diverse companies will not lower the toca C) Concentrating an investment in three companies all within the same industry will nisk greatly reduce the systematic risk. D) Spreading an investment across many diverse assets will eliminate most of the unsystematic risk E) All of the above. 5) Which of the following statements regarding unsystematic risk is accurate? A) It is measured by standard deviation. B) It is measured by beta. C) It is related to the overall economy. D) It can be effectively eliminated by portfolio diversification. E) All of the above 6) Over a certain period, large-company stocks had an average return of 12.94 percent, the average risk-free rate was 2.65 percent, and small-company stocks averaged 17.73 percent. What was the risk premium on small-company stocks for this period? A) 4.79% B) 12.06% C) 20.38% D) 15.08% E) 10.29% 7) The common stock of ABC Petroleum, Incorporated, sells for $45.08 a share. The stock is expected to pay a dividend of $3.50 per share next year. The company has established pattern of increasing their dividends by 5.6 percent annually and expects to continue doing so. Calculate the rate of return on this stock. A) 6.66% B) 7.76% C) 13.36% D) 12.88% E) 15.92%