Please choose a letter answer and explain the answer please.

1. An important trend that has changed the contemporary investment market is .
   1. financial engineering
   2. globalization
   3. securitization
   4. all of the above
2. Historically small firm stocks have earned higher returns than large firm stocks. When viewed in the context of an efficient market, this suggests that .
3. small firms are better run than big firms.
4. government subsidies available to small firms produce effects that are discernable in stock market statistics.
5. small firms are riskier than large firms.
6. small firms are not being accurately represented in the data.

3. Which of the following is not an implication of the CAPM?

1. all investors will hold the market portfolio as their optimal complete portfolio
2. all investors will hold the market portfolio as their optimal risky portfolio
3. the market portfolio has the steepest Capital Allocation Line compared to all other risky securities
4. the more risk averse on average that investors are the higher the market risk premium
5. none of the above
6. a and c

4. In a well-diversified portfolio, risk is negligible.

1. nondiversifiable
2. market
3. systematic
4. unique