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By combining stocks with ______________ in a portfolio, an investor would get big diversification benefits. 1)Negative...

By combining stocks with ______________ in a portfolio, an investor would get big diversification benefits.

1)Negative covariance of stock returns

2)High standard deviation of returns

3)Positive correlation coefficients of stock returns

4)High beta coefficients

Which of the following is true?

S1: The stand-alone risk of a stock can completely be diversified away.

S2: According to the Capital Asset Pricing Model (CAPM), the market risk of a stock is relevant.

1) S1

2) S2

3) Both

4) Neither

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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