Which two of the following five statements are correct? Select two alternatives: A risk-averse investor will avoid investing in stocks

• While there is no clear relationship between risk and return for individual stocks, on average smaller stocks have both higher risk and returns compared to larger stocks.
• The realized return is the total return we earn from dividends and capital gains, expressed as a percentage of the initial stock price

the above two are correct

because small stocks are risky so there is chance of higher return while realized return includes total income from income and capital gains.

A risk-averse investor will avoid investing in stocks- incorrect , because A risk-averse investor will invest in stocks with low risk

Diversification eliminates systematic risk but not idiosyncratic risk, incorrect because Diversification eliminates unsystematic risk not systematic risk

The 95% confidence interval for the expected return is defined as the Historical Average Return plus or minus three standard errors, incorrect because it is 99% not 95%