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1. How would you explain the concepts of risk and expected return to a layperson in non-technical terms? 2. Suppose a portfolio manager told you

1. How would you explain the concepts of risk and expected return to a layperson in non-technical terms?

2. Suppose a portfolio manager told you that a particular stock portfolio was "fully diversified." How do you interpret this claim? What does it mean to be "fully diversified"? What do you expect the annual standard deviation on returns to be on a fully diversified portfolio?

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