Homework Answers
31) As we increase the number of stocks in the portfolio, the standard deviation of returns of the portfolio Decreases
Option 'C' is correct
32) Market risk premium = 9%
Rf = 3.8%
beta = 1.4
Expected return = Rf + [beta * Market risk premium]
Expected return = 3.80% + [1.4 * 9%]
Expected return = 16.4%
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