True and False

1. Systematic risk is the company-specific risk such as the risk of a strike or of losing a major contract.

2. Ordinarily, the risk-free rate of interest (Rf) is assumed to be the rate of return on a U.S. Treasury security with time to maturity equal to the expected holding period of the security in question.

3. Through proper diversification, unsystematic risk can often be eliminated from a portfolio.

4. There is a negative relationship between the size of the cash flows and the value of asset and a positive relationship between the time until the cash flows are received and the asset value.

5. By definition, the market has a beta of 1.00 because the risk is measured relative to the market itself.