A well-diversified investor invests into a share that has higher standard deviation and lower beta compared to its Current portfolio. What is going to be the impact of this investment on the required return of the new portfolio?

Select one:

a) We do not have a conclusion about the required return, only the risks of the portfolio will increase.

b) The required rate of return decreases as the portfolio has higher exposure to common risks.

c) The required rate of return unchanged as the standard deviation and the beta average out each-other

d) The required rate of return decreases as the portfolio has lower exposure to common risks.

Which statement is false?

Select one:

a) WACC is the minimum return that the firm requires from its new investments.

b) WACC is the cost of capital items weighted with the proportion of capital items.

c) WACC is independent from the equity multiplier.

d) WACC is the incremental cost of obtaining additional capital.