1. Which one of these statements related to beta is correct?
A. The beta of a risk-free security is set at 1.
B. The higher the beta, the lower the risk of a security.
C. Beta measures the risk of a single security if held in a large, diversified portfolio.
D. Beta measures the total risk of a single security whether held independently or as part of a portfolio.
E. A stock with a high standard deviation will also have a high beta.
2. If behavioral finance holds, this implies
A. all investors are irrational some of the time.
B. all investors are irrational all the time.
C. some investors are irrational some of the time.
D. some investors are irrational all of the time.
E. all investors are rational all of the time.