PLEASE EXPLAIN SO I CAN UNDERSTAND AND LEARN

1. Which of the following statements about investment portfolios is CORRECT?

a. A portfolio will increase the risk premium of a high-risk stock.

b. Low-risk stocks will lose value when included in a portfolio.

c. The risk level of stocks held in a portfolio generally is lower than the risk if standing alone.

d. Financial institutions sometimes choose to hold portfolios to attract investors to riskier stock.

e. High risk stocks will lower a portfolio's beta.

2. Dorian has a diversified investment portfolio with three different stocks. The portfolio consists of 30% of Stock A, 30% of Stock B, and 40% of Stock C. Stock A has a beta of 1.2, Stock B has a beta of 1, and Stock a. C has a beta of 0.6. What is the beta of Dorian's portfolio?

a. 0.4

b. 0.8

c. 0.9

d. 1.0

e. 1.2

3. Which of the following is TRUE about stock beta?

a. An average risk stock will have a beta of 0.

b. A high beta score has a positive effect on a company's stock price.

c. Zero-risk securities have a beta of 1.

d. A beta of 1 or less signifies a high-risk stock.

e. A company's beta can change as a result of external factors such as patent expirations.