Read the following statements:

1. The indifference curves of an investor who is risk seeking are upward sloping in (risk,expected return)-space.
2. Suppose the market risk premium is 15% and the risk-free rate is 5%. The beta of asset A is 0.2. Under the CAPM, the expected return of A is 8%.
3. U.S. Treasury-Bills are a good proxy of the risk-free rate because they yield a fixed real return, and bear no default risk.

Select all answers that apply (more than one may be correct, or none may be correct).

	A.	Statement 1 is true.
	B.	Statement 2 is true.
	C.	Statement 3 is true.
	D.	None of the statements are true.