Which of the following statements are FALSE? Because investors are risk averse, they will demand...
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Which of the following statements are FALSE? Because investors are risk averse, they will demand a risk premium to hold unsystematic risk. II. A rational investor will always prefer an investment with a lower standard deviation of returns, because such investments are less risky. III. Combining uncorrelated assets can reduce risk not as effectively as combining negatively correlated assets, but more effectively than combining positively correlated assets. IV. Risk-averse investors often select portfolios that include only companies from the same industry group because the familiarity reduces the risk. a. I and IV only b. II and III only c. I, II and IV only d. I. II. III and IV
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