ture or false

1. If you have a portfolio of two risky stocks which turns out to have no diversification benefit. The reason you have no diversification is the returns move perfectly opposite of one another. 116 2. The measure of beta associates most closely with unsystematic risk. no 4 3. A portfolio contains two assets. The first asset comprises 40% of the portfolio and has a beta of 1.2. The other asset has a beta of 1.5. The portfolio beta is 1.35. EX 12 4. MM Proposition I with corporate taxes states that by raising the debt-to equity ratio, the firm can lower its taxes and thereby increase its total value 1E500 43 5. The variance of Stock A is .004, the variance of the market is .007 and the covariance between the two is 0026. The correlation coefficient is 0.4913. 1 6. The Modigliani-Miller Proposition I without taxes states a firm cannot change the total value of its outstanding securities by changing its capital structure proportions HAIR 7. An advantage of the APT over CAPM is APT can handle multiple factors. TEO 8. There are no differences in the capital structure of different industries. DEWO 9. According to the CAPM, the expected return on a security is positively and linearly related to the security's beta