The two-fund separation in the CAPM equilibrium means that every investor holds a combination of the well-diversified market portfolio and therisk-free asset.

True

False

QUESTION 5

The SML is a graphical presentation of the relationship between a security's expected return and its standard deviation.

True

False

QUESTION 6

If other things remain the same, the higher the standard deviation, the lower the beta of a security.

True

False