1. Portfolio theory defines risky investments in 2 ways expectedreturns and variance ( Standard deviation) of expected returns.What assumptions need to be made about investors and the expectedinvestment returns in this 2 factor approach and state if they arejustified in real life.
2. What can be said about the portfolio that is represented byany point along the efficient frontier of risky investmentportfolios?
3. What is meant by two fund separation? 4. The capital assetpricing model tells us that a security with a beta of 2 will beexpected to yield a return twice that of a security whose beta is1. Is this statement true?
