Question 16 1 pts Which of the following statements is correct? The realized return on a stock portfolio is the weighted average of the expected returns on the stocks in the portfolio. O A portfolio's risk is measured by the weighted average of the standard deviations of the securities in the portfolio. It is this aspect of portfolios that allows investors to combine stocks and thus reduce the riskiness of their portfolios. Managers should under no conditions take actions that increase their firm's risk relative to the market, regardless of how much those actions would increase the firm's expected rate of return. If investors become less averse to risk, the slope of the Security Market Line (SML) will increase. It is possible for a firm to have a positive beta, even if the correlation between its returns and those of another firm is negative. Question 15 1 pts A Crockett Corporation's 5-year bonds yield 8.85%, and 5-year T-bonds yield 6.85%. The real risk- free rate is r* = 4.35%, the default risk premium for Crockett's bonds is DRP=0.75% versus zero for T-bonds, the liquidity premium on Crockett's bonds is LP= 1.25%, and the maturity risk premium for all bonds is found with the formula MRP = (t - 3) x 0.5%, where t = number of years to maturity. What is the inflation premium (IP) on 5-year bonds? O 2.00% 1.00% 1.60% O 1.50% O 1.30%