Question: 1What is the efficient frontier and how does it change when more stocks are used to construct portfolios? 2How does the relationship between the average

1What is the efficient frontier and how does it change when more stocks are used to construct portfolios?

2How does the relationship between the average return and the historical volatility of individual stocks differ from the relationship between the average return and the historical volatility of large, well-diversified portfolios?

3Explain what is wrong with the following argument: If a firm issues debt that is risk free,

because there is no possibility of default, the risk of the firms equity does not change.

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