Review Problems Fall 2018 Part O. (Sentence Correction) All Of the following Statements are false. please Char*e the incorrect parts to make them tru DO NOT negate the Sentence, unless necessary. 1 _ IJz(R) where Azriskaversioncoeffkient If an investor'S A approaches infinity, he isa high* ri*- averse person and his utility Curve will be Close to a line. 2 _ correlation coefficient betwn two assets equals their covariance by the prodLXt Of Variances. 3 _ Dwersification iS most effecti When Security returns are 4_ Consider an omrtunitV Set formed with two Securities that are perfectly negative* correlated. The portfolio has a standard 1. Market risk iS also called unsystematic risk or diversifiable risk. 6. Firm-specific risk iS also called Systematic risk or undiversifiable risk. 7. Rational risk-averse 1VeStOtS Will always prefer portfolios located on effkient frontier to on the capital market line. 8_ The market portfolio Can Zentifed by the tar*er'CV point Of efficient frontr and the investors' utility indifference Curve. 9_ Duersification Can reduce or eliminate SVSternatiC risk. 10. The capital line iS the line with the Steepest Slope that Connects the risk-free rate to the efficient front 11, A security'S coefficient Will be negatue if its returns are negatively correlated With risk-free return, 12, According to the CAPM, in equilibrium all investors assets as Stand-alone assets, 13, According to the CAPM, in equilibrium the market portfolio iS the effknt frontier. 14. The portfolio has a beta Of IS. According to the CAPM, a Security With a negative alpha iS underpriced _ 1 S. According to the CAPM, investors a risk premium as for bearir* unsystematic risk. 17. According to the CAPM, a fairly-priced Security will plot on the capital market line. 1B, According to the CAPM, all securits' returns must lie on the capital line in equilibrium. 19. According to the CAPM, the Slope Of the market lir* must be less than the market risk premium. 20. According to the CAPM, the risk premium an investor eX*CtS to receive on any or portfolio iS directly