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Question 1 1 pts Assume that the assumptions of the Capital Asset Pricing Model are...

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Question 1 1 pts Assume that the assumptions of the Capital Asset Pricing Model are true in the economy. Consider a potential portfolio with only long positions in the assets in a portfolio (no shorting). Diversification can reduce or eliminate _risk Choose the best answer. Non-systematic Only an insignificant Systematic All Question 2 1 pts Consider the following statements: 1. For a portfolio that is on the Capital Market Line, its Sharpe Ratio will be greater than the Sharpe ratio of all feasible portfolios that are not on the Capital Market Line. 2. No rational investor would choose a portfolio that plots inside the efficient frontier as their sole risky investment. 3. Consider the set of portfolios on any single Capital Allocation Line. Portfolios with higher expected return have a higher Sharpe Ratio. Which one of the following is correct? Statement 1 is false, Statements 2 and 3 are true. Statement 1 is true, statements 2 and 3 are false Statements 1 and 2 are true. Statement 3 is false. Statements 1, 2 and 3, are true

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