A stock's total risk consists of company-specific risk, which can be eliminated by diversification, plus market risk, which cannot be eliminated by diversification Answer True False 1 points Question 15 The SML is a graphical presentation of the relationship between a security's expected return and its beta. Answer True False 1 points Question 16 If a security is below the SML, a mean-variance investor would sell the security because it is overvalued Answer True False 1 points Question 17 The cost of debt is equal to ohe minus the marginal corporate tax rate (1 - Tc) multiplied by the yield to maturity of the outstanding debt Answer True False 1 points Question 18 The financial leverage is the extent to which fixed-income securities are used in a firm's capital structure. Answer True False 1 points Question 19 MM's proposition I under no taxes implies that an issue of debt increases both the expected earnings per share (EPS) and the risk of the EPS. As a result, the stock price remains the same. nouor T