i. The profitability index is only completely reliable if the set of projects taken following the profitability index ranking completely exhausts the available resource and there is only a single relevant resource Bonstraint. ii. When comparing two mutually exclusive opportunities using the incremental methodology, we will always choose the bigger project if the IRR of the incremental project is greater than the cost of capital. iii. Since oil industry stocks have high standard deviations, such stocks should not be included in a well-diversified portfolio of a risk-averse investor. iv. A downward-sloping term structure of interest rates often precedes a recession. v. If a portfolio has a positive investment in every asset, the standard deviation on the portfolio should be greater than that on every asset in the portfolio deviation on the portfolio should be greater than that on every the portfolio ii and v i and ii i, iv, and v ii, iii and v i and iv