QUESTION 21

Diversification can effectively reduce risk. Once a portfolio is diversified, the type of risk remaining is:

	A.	individual security risk.
	B.	riskless security risk.
	C.	unsystematic risk
	D.	systematic risk

3 points

QUESTION 22

Efficient portfolios are those, which offer:

	A.	Highest expected return for a given level of risk
	B.	Highest risk for a given level of expected return
	C.	The maximum risk and expected return
	D.	All of the above

3 points

QUESTION 23

........................ Standard Deviation ........ Beta

Security X .............. 0.35 ........................ 1.45

Security Y ............. 0.28 ......................... 1.06

Security Z ............ 0.44 .......................... 1.22

Which of the following is correct?

.

	A.	Security Z has the greatest total risk because it has the largest standard deviation.
	B.	Security X has the greatest total risk because it has the largest beta.
	C.	Security X has the greatest diversifiable risk because it has the largest beta.
	D.	Security Y has the lowest total risk because it has the lowest beta.
	E.	An equally-weighted portfolio of XYZ will have the same systematic risk as the market portfolio.