1. Which of the following statements is true?

1. It is very difficult for investors to remove their exposure to unsystematic risk.

2. It is very easy for investors to remove their exposure to systematic risk.

3. It is very easy for investors to remove their exposure to unsystematic risk.

4. Both (a) and (b) are true

5. None of the above statements is true

2. You are presented with 4 distinct investment opportunities involving a Treasury Bill, a Treasury Bond, a Corporate Bond, and a Stock. You are told that each of these investments are expected to produce (after the cash is paid out then no other cash flows are anticipated) $100 one year from now. Which asset should be the least expensive today, in terms of dollars that you will have to pay for the asset?

1. Corporate Bonds

2. Treasury Bonds

3. Stocks

4. Treasury Bills