Which of the following is/are true regarding risk and return?

I. Small company stocks carry more risk than large company stocks, but over time have had a lower return

II. Diversification is the best method for reducing systematic risk

III. The Market Risk Premium is the difference between the expected rate of return of the market amd the risk free rate of return

IV. Total Risk can be found by adding an assets Beta to its Standard Deviation

Multiple Choice

• II Only

• II and III only

• I, II, and III only

• III only

• All are False