on 15 Which of the following statements is most correct concerning diversification and risk? t red ed out of ag question Select one: a. Diversification is mainly achieved by the asset allocation decision, not the selection of individual securities within each asset category. b. Diversification is mainly achieved by the selection of individual securities for each type of asset held in a portfolio. O C. Asset allocation is important for pension funds but not for individual investors. d. Large company stocks and small company stocks together in a portfolio lead to dramatic reductions in risk because their returns are negatively correlated. 16 Stock A has a beta of 1.2 and a standard deviation of returns of 18%. Stock B has a beta of 1.8 and a standard deviation of returns of 18%. If the market risk premium increases, then but of question Select one: a the required returns on stocks A and B will remain the same O be the required return on stock B will increase more than the required return off stock A C. the required retum on stock A will increase more than the required return on stock B d the required returns on stocks A and B will both increase by the same amount