Answers
Answer(1): True
Correlation takes place when two variables/securities move together in the same direction.
Answer(2): True
Diversifiable risk is related to company/security, that can be reduced by proper diversification. Market risk cannot be reduced by diversification, it can only be reduced by asset allocation.
Answer(3): False
Floating rates pay variable rates, their rate of return keep fluctuating while fixed rate bonds pay a fixed rate of interest.
Answer(4): True
Market portfolio contains many stocks of different companies. Beta is a measure of systematic risk that tells how much a stock moves with respect to stock market.
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