1. If equal risk is added moving along the envelope curve containing the best possible combinations the return will a) increase at an increasing rate. b) decrease at an increasing rate. c) increase at a decreasing rate. d) decrease at a decreasing rate.
2. A completely diversified portfolio would have a correlation with the market portfolio that is a. equal to one because it has only systematic risk. b. less than one because it has only unsystematic risk. c. equal to zero because it has only unsystematic risk. d. less than zero because it has only systematic risk.