55. If stocks were perfectly positively correlated, diversification would not reduce risk A. True B. False 56. Diversification over many stocks will eventually completely eliminate risk A. True B. False 57. A well-diversified portfolio with a beta of 2.0 is twice as risky as the market portfolio A. True B. False 58. In whic h of the following situations would you get the largest reduction in risk by spreading your investment across two stocks? A. The two shares are perfectly correlated B. There is no correlation C. There is modest negative correlation D. There is perfect negative correlation 59. There are two major types or risk associated with investing. They are: A. Financing risk and environmental risks B. Insurance risk and interest rate risk c. Unique/specfic risk and market risk Market risk and global warming D. 60. Generally, as you add more stocks to your portfolio you will enjoy a rapid increase in diversification early on followed by a relatively flat pattern. A. True B. False 6 i. Assume you own two stocks, Apple and Microsoft, 70% of your portfolio is in Apple stock and the balance is in Microsoft. Assume further that Apple has a standard deviation of 21.1% and Microsoft has a standard deviation of 32.3%. If we consider the two stocks to be perfectly positively correlated what is the standard deviation of the combined portfolio? A. 21.34% B. 22.18% C. 24.46% D. 28.27%