1. The euro is
A. established in all of the European countries.
B. a common currency, but countries that use it are allowed to have their own monetary policy.
C. the most important international currency.
D. all of these options are true.
2. Which of the following statements is FALSE?
Every investor should invest in the tangent portfolio independent of his or her taste for risk.
If we increase the fraction invested in the efficient portfolio beyond 100% we are short selling the risk-free investment.
As we increase the fraction invested in the efficient portfolio, we increase our risk premium but not our risk proportionately.
To earn the highest possible expected return for any level of volatility we must find the portfolio that generates the steepest possible line when combined with the risk-free investment.