Question: A portfolio manager is constructing a new equity portfolio consisting of a large number of randomly chosen domestic stocks that are not perfectly correlated. As

A portfolio manager is constructing a new equity portfolio consisting of a large number of randomly chosen domestic stocks that are not perfectly correlated. As the number of stocks in the portfolio increase, determine what happens to the expected levels of systematic and unsystematic risk?
a.
Decreases Remains the same
b.
Increases Decreases
c.
Decreases Increases
d.
Remains the same Decreases

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