True or False Questions (ALERT!!)

1. A stock with a low standard deviation always contributes less to portfolio risk than a stock with a higher standard deviation. 2. According to MM model, in a perfect capital market, the total value of a firm is affected by the choice of capital structure due to the exist of interest tax shield. 3. When a company tends to use IPO as the way to raise capital, the costs of issuing an IPO is very low. 4. An efficient portfolio cannot be diversified further, that is there is no way to reduce the risk of the portfolio without lowering its expected return.