a. A portfolio is invested in a very large number of shares (n is large). However, one-half
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a. A portfolio is invested in a very large number of shares (n is large). However, one-half of the portfolio is invested in stock 1, and the rest of the portfolio is equally divided among the other n − 1 shares. Is this portfolio well diversified?
b. Another portfolio also is invested in the same n shares, where n is very large. Instead of equally weighting with portfolio weights of 1/n in each stock, the weights in half the securities are 1.5/n while the weights in the other shares are .5/n. Is this portfolio well diversified?
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Related Book For
ISE Investments
ISBN: 9781260571158
12th International Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus
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