Question: Diversification Assume that every asset has the same expected return and variance. Furthermore, all assets have the same covariance with one another. As the number

Diversification Assume that every asset has the same expected return and variance. Furthermore, all assets have the same covariance with one another. As the number of assets in the portfolio grows, which becomes more important: variance or covariance? Clarify your answer using words, diagrams, formulae or a practical example.

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