1. Portfolio risk can be reduced by__________________ . 2. PAB= 1.0 means that assets A and B have a(n)___________________. 3. The , ________________or_______________ , equation shows that the...

1. Portfolio risk can be reduced by__________________ .

2. PAB= 1.0 means that assets A and B have a(n)___________________.

3. The , ________________or_______________ , equation shows that the required rate of return on a security is equal to the risk-free rate plus_________________ .

4. The valuation process involves finding the_______________ of an asset’s expected future cash flows using the investor’s required rate of return.