The diversification effect is illustrated in the figure because the curved line is always to the left

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The diversification effect is illustrated in the figure because the curved line is always to the left of the straight line. Consider point 1. This represents a portfolio composed of 90 percent in Slowpoke and 10 percent in Supertech if the correlation between the two were exactly LO.1

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Corporate Finance

ISBN: 9780073105901

8th Edition

Authors: Jeffrey Jaffe, Bradford D Jordan

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