Answer by True or false

1 - if you have a portfolio of two risky stocks which turns out to have no diversification benefit. The reason you have no diversification is the returns move perfectly opposite of one another.

2.- An advantage of the APT over CAPM is APT can handle multiple factors.

3.- A portfolio contains two assets. The first asset comprises 40% of the portfolio and has a beta of 1.2. The other asset has a beta of 1.5. The portfolio beta is 1.35.

4.- The single factor APT model that resembles the market model uses arbitrage fees as the single factor.

5.- MM Proposition I with corporate taxes states that by raising the debt-to-equity ratio, the firm can lower its taxes and thereby increase its total value.

6.- The measure of beta associates most closely with unsystematic risk.

7.- The Modigliani-Miller Proposition I without taxes states a firm cannot change the total value of its outstanding securities by changing its capital structure proportions.

8.- According to the CAPM, the expected return on a security is positively and linearly related to the security's beta.

9.- There are no differences in the capital-structure of different industries.

10.- The variance of Stock A is .004, the variance of the market is .007 and the covariance between the two is .0026. The correlation coefficient is 0.4913.