Indicate whether each of the following statements is TRUE or FALSE and indicate the reasons.

1. In the presence of diversification benefits, when we combine two assets together into a portfolio, the systematic risk of the portfolio will be less than the weighted average systematic risk of the individual assets in the portfolio.

2. When a division of a company utilizes the NPV technique to assess a project, they should always include any costs associated with running the companys head office allocated to the division.