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QUESTION 17 5 points Save Answer Which statement is TRUE? O If you have n indepenednet investments where n is large number, you can create
QUESTION 17 5 points Save Answer Which statement is TRUE? O If you have n indepenednet investments where n is large number, you can create a portfolio for which the total risk is almost zero. O Systematic risk can be diversified away therefore you don't get compensated for it. Idiosyncratic risk can be diversified away therefore you get compensated for it. O Combining investments that are positively correlated does not provide any diversification benefit. QUESTION 18 5 points Save Answer If we believe in CAPM, ... O we do not care about market risk premium. a we demand compensation (higher return) to take on idiosyncratic risk. we MAY demand different expected returns for 2 assets with the same beta the only risk that matters to us is market risk. QUESTION 19 5 points Save Answer Which statement is TRUE? O CAPM does NOT depend on the existance of the market portolio. O You can NOT have more than a certain number of factors in APT. O CAPM is similar to one-factor APT where the factor is the market. O CAPM is more general and less ristrictive than APT. QUESTION 20 5 points Save Answer Which statement is TRUE? Olf 2 assets have a correlation equal to -1, there MIGHT be a portfolio of the 2 assets with zero risk. O If 2 assets have a correlation equal to -1, there is ALWAYS a portfolio of the 2 assets with zero risk. The higher the correlation between 2 assets, the higher the diverification benefit of combining them. Olf 2 assets have a correlation equal to +1, you would NEVER combine them and create a portfolio becuase there is no diversification benefit
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