1. When a security is added to a portfolio the appropriate return and risk contributions are:

the expected return of the asset and its standard deviation.

the expected return and the variance.

the expected return and the beta.

the historical return and the beta.

these both cannot be measured.

2. The combination of the efficient set of portfolios with a riskless lending and borrowing rate results in:

the capital market line which shows that all investors will only invest in the riskless asset.

the capital market line which shows that all investors will invest in a combination of the riskless asset and the tangency portfolio.

the security market line which shows that all investors will invest in the riskless asset only.

the security market line which shows that all investors will invest in a combination of the riskless asset and the tangency portfolio.

None of these.