Question: State whether the following statements are true or false. a. The expected rate of return on an investment with a beta of 2.0 is twice

State whether the following statements are true or false.

a. The expected rate of return on an investment with a beta of 2.0 is twice as high as the expected rate of return of the market portfolio.

b. The contribution of a stock to the risk of a diversified portfolio depends on the market risk of the stock.

c. If a stocks expected rate of return plots below the security market line, it is underpriced.

d. An undiversified portfolio with a beta of 2.0 is less than twice as volatile as the market portfolio.

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