?Risk Management? questions:

1. If one of your stocks has a relatively high beta of 1.4 and is
currently doing exceedingly well, why would you want a stock in your
portfolio with a relatively low beta of 0.7 that has been recently
under-performing?

2. By diversifying your investments according to betas, have you
entirely removed the potential risk of losses due to a declining stock
market? Explain.

3. If you are relatively risk adverse, would you require a higher beta
stock to induce you to invest than the beta required by a person more
willing to take risks? Explain.

4. Is it possible to construct a portfolio that is risk free? Explain.