1. The _______ decision should take precedence over the _____ decision.a asset allocation; stock selectionb bond selection; mutual fund selectionc stock selection; asset allocationd stock selection; mutual fund selection2. The optimal risky portfolio can be identified by finding:I. The minimum-variance point on the efficient frontierII. The maximum-return point on the efficient frontier and the minimum-variance point on the efficient frontierIII. The tangency point of the capital market line and the efficient frontierIV. The line with the steepest slope that connects the risk-free rate to the efficient frontiera I and II onlyb II and III onlyc III and IV onlyd I and IV only3.A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 35%, while stock B has a standard deviation of return of 15%. The correlation coefficient between the returns on A and B is .45. Stock A comprises 40% of the portfolio, while stock B comprises 60% of the portfolio. The standard deviation of the return on this portfolio is _________.a. 23%b. 19.76%c. 18.45%d. 17.67%4. A measure of the riskiness of an asset held in isolation is ____________.a betab standard deviationc covarianced alpha5. Which risk can be partially or fully diversified away as additional securities are added to a portfolio?I. Total riskII. Systematic riskIII. Firm-specific riska I onlyb I and II onlyc I, II, and IIId I and III
