Question 17 Which of the following is true regarding a stock with beta equal to 1.5? The stock has a 50% higher expected return than that of the average stock. The stock has 50% more systematic risk than does the average stock. O Givend a market risk premium of 10%, the expected return on the stock would be 15%. The total risk for the stock is 50% greater than that for the market portfolio. o If the risk-free rate is 5%, the expected return on the stock would be 7.5%. Question 18 The principle of diversification tells us that: O Spreading an investment across many diverse assets will eliminate all of the risk. O Spreading an investment across many diverse assets will eliminate some of the risk. O Concentrating an investment in two or three large stocks will reduce your overall risk. O Spreading an investment across many diverse assets cannot (in an efficient market) elimin O Concentrating an investment in two or three large stocks will eliminate all of your risk