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Question 16 (2 points) Saved Suppose that you wish to invest in the Amazing Hedge Fund. You estimated that the beta of the Amazing Hedge Fund is equal to 5. Assume that the CAPM holds. From this information only, can you conclude that the Amazing Hedge Fund is not well-diversified and the further diversification is possible? Cannot answer this question based on the information provided. O Yes, because the beta of this hedge fund is 5 and the beta of the market portfolio is only 1. O No, because the beta measures only the systematic risk and this risk cannot be diversified away. No, the high beta simply means that the hedge fund pays a very high return. O Yes, because the beta measures the risk of this hedge fund and it is very high relatively to the market portfolio.Which of the following are assumptions of the simple CAPM model? 1. Individual trades of investors do not affect a stock's price. 2. All investors plan for one identical holding period. 3. All investors analyze securities in the same way and share the same economic view of the world. 4. All investors have the same level of risk aversion. 1, 2, and 3 only 1, 2, and 4 only O 1 and 3 only 1, 2, 3, and 4 O 2, 3, and 4 onlyQuestion 18 (2 points) Saved Consider the CAPM. The risk-free rate is 6%, and the expected return on the market is 18%. What is the expected return on a stock with a beta of 1.3? O 6.90% 10.51% 18.00% 21.60% 19,73%