6. The ____ the standard deviation, the ____ the investment.

A. smaller, larger the expected return on

B. smaller, riskier

C. larger, riskier

D. larger, smaller the expected return on

7. Which of the following statements is false?

A. A portfolio composed of only one stock will not be well diversified.

B. A wise investor diversifies to capture the high average return of stocks while avoiding as much risk as possible.

C. You can completely eliminate risk if you hold a well-diversified portfolio.

D. Beta is meaningful only if an investor holds a well-diversified portfolio.

E. All of these statements are correct.