2. Because the SML is based only on non-diversifiable risk, in a plot of expected return on beta,...

	A.	Individual stocks will plot on the SML.
	B.	Individual stocks could plot above or below the SML.
	C.	Individual stocks will plot above the SML.
	D.	None of the responses is correct.
	E.	Individual stocks will plot below the SML.

3. The expected market return is 12%, the risk-free return is 4%. What is the expected return of a stock that is as risky as the market but has a Beta of 0.25?

	A.	10%
	B.	None of the answers is correct.
	C.	6%
	D.	4%
	E.	8%

4. Because the CML is based on total risk, in a plot of expected return on standard deviation of returns, ...

.	A.	Individual stocks will plot above the CML.
.	B.	None of the responses is correct.
.	C.	Individual stocks will plot below the CML.
.	D.	Individual stocks will plot on the CML.
.	E.	Individual stocks could plot above or below the CLM.

5. The expected return on a stock depends on which of the following:

	A.	The non-diversifiable risk of the stock.
	B.	None of the responses is correct.
	C.	How well-diversified the portfolio will be.
	D.	The diversifiable risk of the stock
	E.	The total risk of the stock.

6. High beta stocks have which of the following?

.	A.	None of the responses is correct.
.	B.	Higher diversifiable risk than now beta stocks
.	C.	Higher non-diversifiable risk than now beta stocks.
.	D.	Higher total risk than low beta stocks.