Question: 1. How does diversification help investors reduce overall risk? 2. Explain the benefits of having an internationally diversified portfolio 3. Define diversifiable and non-diversifiable risk.

1. How does diversification help investors reduce overall risk?

2. Explain the benefits of having an internationally diversified portfolio

3. Define diversifiable and non-diversifiable risk. Explain which one is relevant risk.

4. Briefly explain the capital asset pricing model (CAPM & Beta) and the security market line (SML).

5. Explain how you can reconcile the traditional and modern approaches.

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