True$/$False

State whether the following statements are true or false. You do NOT need to provide a justification.

a$)$ In the market history, big portfolios' average returns are proportional to their standard deviation $($volatil$-$

ity$).($True $/$ False$)$

b$)$ In the market history, individual stocks' average returns are proportional to their standard deviation

$($volatility$).($True $/$ False$)$

c$)$ When investing in an individual stock, investors would receive compensation $($higher return$)$ only for a

fraction of the stock's standard deviation. $($True $/$ False$)$

d$)$ Suppose that a pharmaceutical just announced the development of a new medicine. In response to this

company$-$specific news, stock prices in other industries would fall. $($True $/$ False$)$

e$)$ Suppose the Federal Reserve just announced a raise in its policy interest rates, making it harder for most

businesses to borrow money to pursue new investment opportunities. In response to this market$-$wide

news, most stock prices will fall. $($True $/$ False$)$

f$)$ Consider stocks that are exposed only to independent risks $($no systematic risks$).$ As we add more and

more stocks in a portfolio, the portfolio volatility falls. $($True $/$ False$)$

g$)$ Consider stocks that are exposed only to systematic risks $($no independent risks$).$ As we add more and

more stocks in a portfolio, the portfolio volatility falls. $($True $/$ False$)$