please answer all otherwise dont take

Question 1:

Diversification benefit is possible by combining two assets with __________. [I] negative correlation [II] zero correlation [III] positive correlation

a. I only

b. II only

c. III only

d. I and II

e. I, II and III

Question 2:

Question 3: Portfolios on the Capital Market Line (CML) have different levels of ____?

a. Idiosyncratic risk

b. total risk

c. sharpe ratio

d. risk-free rate

e. none

Question 4: Risk that CAN be eliminated through diversification is ______ risk. [I] Firm-specific [II] Idiosyncratic [III] Systematic [IV] Market

a. I

b. II

c. I and II

d. I and III

e. II, III and IV

Question 5:

Suppose that a stock portfolio and a bond portfolio have a correlation of 0.5. Which of the following is true? [I] When stock price increases, bond price must increase [II] It is possible to achieve diversification by combining the stock and bond portfolios [III] A zero variance portfolio can be formed by combing the stock and bond portfolios

a. I

b. II

c. I and II

d. I and III

e. I, II and III

Question 6:

f the CAPM is valid and all portfolios are priced correctly, which of the situations below is/are NOT possible? consider each situation independently, and assume the risk-free rate is 5%. Situation A only Situation B only Situation A and B Neither situation The expected return and betas for three stocks are given below: Market returns, Rm, is 8% and risk-free rate is 3%. Which of the three stocks is undervalued according to the CAPM? A B C None There is not enough information to answer this