Which of the following statements is CORRECT? An investor can eliminate virtually all unsystematic risk if he or she holds a very large, well diversified portfolio of stocks. An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks. Once a portfolio contains about 4 or 5 stocks, adding additional stocks will do little to reduce risk. The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio.

Jillian has the following four stocks, including her dollar investment in each one and its respective beta, in her portfolio: Stock Investment Beta IBM $150,000 1.20 AT&T 50,000 0.90 Ford 200,000 0.30 GM 100,000 2.20 What is Jillian's beta for her portfolio of stocks?

1.36

0.79

1.01

1.14

Global Shipping has a beta of 0.85, the real risk-free rate is 2.50%, investors expect a 3.50% future inflation rate, and the market risk premium is 4.80%. What is Global Shipping's required rate of return?

9.32%

9.67%

10.64%

10.08%

Below are the returns for the past five years for Teledyne Inc. common stock and for the overall market, r_M:

Year Teledyne Market, r_M 2012 16.5% 11.2% 2013 21.3% 15.6% 2014 17.4% 10.1% 2015 9.2% 3.0% 2016 29.1% 16.7%

What is the estimated beta of the Teledyne stock? Hint: You can use either a calculator or Excel to answer this question.

-0.83

+2.44

+0.79

+1.25