TRUE OR FALSE AND EXPLAIN

1. You cant form a riskless portfolio out of two risky assets no matter how their returns are correlated. For example, if Asset A has a standard deviation of returns of 30% p.a. and Asset B a standard deviation of returns of 20% p.a., any portfolio consisting of an investment in these two assets will have risk associated with it.

2. The capital market line (CML) is the graphical representation of the CAPM and describes the risk-return relationship for individual assets and inefficient portfolios.

3. The delayed investment problem that sometimes plagues IRR is linked to the fact that sometimes a project doesnt have an IRR. To address this problem, the incremental rate of return is often calculated instead.