QUESTION 9

The slope of the SML is determined by investors' aversion to risk. The greater the average investor's risk aversion, the flatter the SML.

True

False

QUESTION 10

Even if the correlation between the returns on two securities is +1.0, if the securities are combined in the correct proportions, the resulting 2-asset portfolio will have less risk than either security held alone.

True

False

QUESTION 14

Risk-averse investors require higher rates of return on investments whose returns are highly uncertain, and most investors are risk averse.

True

False