A portfolio is _____. a) a group of assets, such as stocks and bonds, held as a collective unit by an investor b) the expected return on a risky asset c) the expected return on a collection of risky assets d) the variance of returns for a risky asset Risk that affects only a single asset or a small number of assets is called _____ a) Idiosyncratic risk b) Diversifiable risk (or unsystematic risk or non-market risk) c) Systematic risk (or non-diversifiable risk or market risk) d) Asset-specific risk The principle of diversification tells us that _____ a) concentrating an investment in two or three large stocks will eliminate all of the unsystematic (or diversifiable or nonmarket) risk b) concentrating an investment in three companies all within the same industry will greatly reduce the systematic (or non-diversifiable or market) risk c) spreading an investment across many diverse assets will eliminate all of the systematic (or non-diversifiable or market) risk d) spreading an investment across many diverse assets will eliminate some of the total risk Which of the following is true regarding the beta coefficient in the Capital Asset Pricing Model (CAPM)? a) It is a measure of unsystematic risk. b) A beta greater than one represents lower systematic risk than the market. c) Generally speaking, the higher the beta the higher the expected return. d) A beta of one indicates an asset is totally risk-free. Which one of the following is represented by the slope of the security market line (SML)? a) Market standard deviation b) Beta coefficient c) Risk-free rate of return d) Market risk premium