QUESTION 16 The four most fundamental factors that affect the cost of money are (1) production opportunities, (2) time preferences for consumption, (3) risk, and (6) inflation, True False QUESTION 17 A 15-year bond with a face value of $1,000 currently sells for $850. Which of the following statements is CORRECT? 1. The bond's current yield is equal to its coupon rate. 2. The bond's current yield exceeds its yield to maturity, 3. The bond's coupon rate exceeds its current yield. 4. If the yield to maturity stays constant until the bond matures, the bond's price will remain at $850. 5. The bond's yield to maturity is greater than its coupon rate. QUESTION 18 Which of the following statements is CORRECT? 1. An investor can eliminate virtually all diversifiable risk if he or she holds a very large, well diversified portfolio of stocks, 2. Once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount. 3. It is impossible to have a situation where the market risk of a single stock is less than that of a portfolio that includes the stock 4. An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks 5. The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio