If investors can freely trade assets in financial markets, then the impact of trading activity on expected returns insures that:

I. all assets will have the same degree of total risk

II. systematic risk can be diversified away

III. all assets will have the same expected returns

IV, all assets will have the same reward to risk ratio

V. all assets will have the same risk premium

1, I only

2. Il and Ill X

3. IV only

4, III and IV

5, III, IV and V X

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