Question 1 3 pts According to Markowitz (Modern Portfolio Theory), which of the following are true? (Select ALL that apply): Downside risk is more important to an investor than upside Spreading investments across non-correlated assets reduces overall portfolio risk Risk is reduced by diversification A portfolio should consider how each asset impacts others in a portfolio Question 2 3 pts Which of the following are criticisms of Modern Portfolio Theory? (Select ALL that apply): Modern Portfolio Theory fails to appropriately measure downside risk Diversification has its limits Spreading investments across non-correlated assets reduces overall portfolio risk Risk is reduced by diversification Question 3 3 pts Which are true regarding Elton & Gruber's principles of diversification? (Select ALL that apply): Concentrated portfolios of between 20-30 diversified positions can be quite effective An actively managed mutual fund with 185 equity positions loses its effectiveness due to overdiversification The standard deviation risk of a portfolio with 3 stocks is higher than the standard deviation risk of a portfolio with only a single stock A portfolio must have at least 100 positions to achieve the full benefit of diversification