Question

Which of the following statements regarding investment risk is correct?

1.) Beta is a measure of systematic, non-diversifiable risk

2.) Rational investors will form portfolios and eliminate systematic risk

3.) Rational investors will form portfolios and eliminate unsystematic risk

4.) Systematic risk is the relevant risk for a well diversified portfolio

5.) Beta capture all the risk inherent in an individual security

a.) 1 and 5

b.) 2 and 5

c.) 1,3, and 4

d.) 2,3, and 4