Which of the following is CORRECT?

o A two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.

o A portfolio that consists of 40 stocks that are not highly correlated with the market will probably be less risky than a portfolio of 40 stocks that are highly correlated with the market assuming the stocks all have the same standard deviations.

o A two-stock portfolio will always have a lower beta than a one-stock portfolio.

o It is always a good investment strategy to hold low-beta stocks in a portfolio.

At maturity, the value of any bond must equal its par value. The value of a premium bond would decrease to $1000. The value of a discount bond would increase to $1000.