1. "For a portfolio comprised of 2 stocks, diversification exists only if the correlation coefficient between the stocks is negative." True or false?

a. True

b. False

2. "The intercept of the characteristic line is the beta estimate for the asset in question." True or false?

a. True

b. False

3. “The Sharpe measure is based on the concept of total risk, so it is appropriate for evaluating only the diversified portfolios.”

True or false?

4. "A well-specified model should include all the relevant factors and yet exclude any factor that is not relevant." True or false?

a. True

b. False