Which of the following statement is incorrect? O Portfolios with betas smaller than 1.0 contain more diversifiable risk than the market. Most of the answers are correct. The market risk premium is the required rate of return on the overall market minus the risk-free rate (km - krf) representing the additional return demanded by investors for taking on the risk of investing in the market itself. O Diversifiable risk is irrelevant because the diversity of each investor's portfolio essentially eliminates that risk. OA very risky project will have a high beta coefficient, whereas low risk projects will have a lower beta. htt Which of the following statement is incorrect? O Most of the answers are correct. O The market risk premium, (km - RFR), indicates the premium investors require over the risk-free rate to invest in the general market index. O The CAPM is used to determine the appropriate coefficient of variation for projects of different degrees of risk. The return that well-diversified investors demand when they buy a security, as measured by the CAPM and beta, relates to the degree of nondiversifiable risk in the security. O The diversification effect results in risk reduction because we are combining two assets that have returns that are negatively correlated (r= -1.0). Which of the following statement is incorrect? O The beta of the market = 1.00, and stocks that tend to move in tandem with the market have a beta of 1.00. O Most of the answers are correct. O The coefficient of variation is a numerical indicator of how widely dispersed the possible values are around a mean. O The three components of the CAPM include the risk-free rate of return (krf), the market risk premium (km-krf), and the project's beta (?). O High-risk (high-beta) projects have high required rates of return, and low- risk (low-beta) projects have low required rates of return