Question: Why, in an efficient capital market, does the cost of capital depend on systematic risk rather than diversifiable risk. Explain your answer using an example

Why, in an efficient capital market, does the depend on systematic risk rather than diversifiable risk. Explain your answer using an example from the text.?

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Why, in an efficient capital market does the cost of capital depend on systematic risk rather than diversifiable risk? Explain your answer using an example from the text.

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