risk decreases By adding more more firms into a portfolio, the while the ____risk remains unchanged. OA. market; firm-specific OB. firm-specific; market OC. systematic; unsystematic OD. non-diversifiable; diversiable Given 10% expected returns for both assets X and Y, and 20% and 25% standard deviation for returns of X and Y respectively, most investors would prefer ____ to ____. Such behavior is called ____ O A. X; Y; risk-aversion OB. Y; X; risk-aversion OC. X; Y; risk-loving OD. Y; X; risk-loving risk of the asset or The beta term in the CAPM captures the portfolio. O A. firm-specific B. non-diversifiable OC. diversifiable O D. idiosyncratic _ the Security At equilibrium, the return of an asset should lie_ Market Line, SML. O A. above OB. below OC. on OD. randomly above and below Given k_RF = 2%, E(k_m) = 12%, and the asset is 150% as risky as the market. Estimate the required return of the asset. O A. 10% OB. 15% O C. 17% OD. 18% Given k_RF=2%, E(k_m) = 12%, and the asset is only half as risky as the market. Estimate the required return of the asset in %. O A. 10 OB. 7 O C. 5 OD. 5.5 As the number of assets in a portfolio increases, the risk (as measured by the standard deviation) of the portfolio comes increasingly from the _ and decreasingly from the ____ of component assets. O A. Co-variances; variances OB. variances; co-variances OC. correlation coefficient; variances OD. variances; correlation coefficient