7

Which of the following statements is CORRECT?

A. All are correct.

B. It is possible to have a situation where the market risk of a single stock is less than that of a portfolio that includes the stock.

C. The lower the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio.

D. An investor canNOT eliminateALL market risk even if he or she holds a very large and well diversified portfolio of stocks.

8

Which of the following statements is NOT CORRECT?

A. None of the above.

B. A project's MIRR can never exceed its IRR.

C. If Project A's IRR exceeds Project B's, A's NPV could still be lower than B's NPV.

D. If a project with normal cash flows has an IRR greater than the WACC, the project must also have a positive NPV.