Base your answer on the following data:
|
Returns on asset 1
|
Returns on asset 1
|
|
5%
|
3%
|
|
8%
|
5%
|
|
3%
|
5%
|
|
5%
|
3%
|
|
3%
|
8%
|
|
5%
|
5%
|
A. Asset 1 returns are riskier than asset 2 returns.
True False
B. In this case any reduction in risk realized by diversifying across the two assets comes at a cost of lowing expected return.
True False
C. A portfolio constructed by investing 50% of your capital in asset 1 and 50% in asset 2 will have 10% of the risk of a portfolio composed of either 100% of capital invested in either asset 1 or asset 2. True False