Diversification is an important concept in characterizing risk and return. Which of the following best defines what diversification is? The process of putting money in different types of investments for the purpose of reducing the overall risk of the portfolio The process of selecting different investments with the strongest correlation for the purpose of maximixing returns in the portfolo The process of selecting the right mix between risk-free and risky assets The process of analyzing historical average returns for different investments. Company CCC expects to earn a 12% return next year. The firm has a beta of 1.1, expected return in the market is 10% and the risk free rate is at 2%. Using CAPM determine what return the company should earn given this risk, and determine if the company is over- or under-valued. 10.8%; over-valued O 10.8%; under-valued 9%, over-valued 9%, under-valued