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Consider an equally weighted portfolio of stocks in which each

Consider an equally weighted portfolio of stocks in which each stock has a volatility of 40%, and the correlation between each pair of stocks is 20%.

a. What is the volatility of the portfolio as the number of stocks becomes arbitrarily large?

b. What is the average correlation of each stock with this large portfolio?

a. What is the volatility of the portfolio as the number of stocks becomes arbitrarily large?

b. What is the average correlation of each stock with this large portfolio?

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