12. Explain how diversification reduces risk. What type of risk does diversification reduce? Use the portfolio...
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12. Explain how diversification reduces risk. What type of risk does diversification reduce? Use the portfolio variance equation and make-up a two-asset portfolio that proves mathematically that diversification reduces risk. 1. if one stuck goes down than I wont affect the other stocks going up in a portfolia. Theduces risk by spreading out losses thin. is can flex with the volatility of the market 2. unsystematic risk 12. Explain how diversification reduces risk. What type of risk does diversification reduce? Use the portfolio variance equation and make-up a two-asset portfolio that proves mathematically that diversification reduces risk. 1. if one stuck goes down than I wont affect the other stocks going up in a portfolia. Theduces risk by spreading out losses thin. is can flex with the volatility of the market 2. unsystematic risk
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Diversification is a fundamental principle in portfolio management that reduces risk by spreading in... View the full answer
Related Book For
Investments
ISBN: 9781259271939
9th Canadian Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus, Lorne Switzer, Maureen Stapleton, Dana Boyko, Christine Panasian
Posted Date:
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