4. Which of the following statements is FALSE? a. Investments with higher volatility have rewarded investors with higher average returns. b. Riskier investments must offer investors higher average returns to compensate them for the extra risk they are taking on. c. Volatility seems to be a reasonable measure of risk when evaluating returns on large portfolios and the returns of individual securities. d. Investments with higher volatility should have a higher risk premium and therefore higher returns. 5. 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 risk-free rate is closest to: a. 4% b. 16% c. 8% d. 0% 6. All of the following are examples of idiosyncratic risk except: a. factory burning down b. Regulation that affects corporate tax rates c. Corporate policies resulting in the physical harm of a customer d. A hostile takeover of the company