Question: (8 marks) Diversification and Portfolio Choice a. Explain the difference between systematic risk and and non-systematic risk of an investment. (4 marks) b. With reference

(8 marks) Diversification and Portfolio Choice

a. Explain the difference between systematic risk and and non-systematic risk of an investment. (4 marks)

b. With reference to your answer in part a. explain why portfolio risk tends to decline as the number of stocks in a portfolio increases. (4 marks)

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