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12. Explain how diversification reduces risk. What type of risk does diversification reduce? Use the portfolio variance equation and make-up a two-asset portfolio that
12. Explain how diversification reduces risk. What type of risk does diversification reduce? Use the portfolio variance equation and make-up a two-asset portfolio that proves mathematically that diversification reduces risk. 1. if one stuck goes down than I wont affect the other stocks going up in a portfolia. Theduces risk by spreading out losses thin. is can flex with the volatility of the market 2. unsystematic risk
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Investments
Authors: Zvi Bodie, Alex Kane, Alan Marcus, Lorne Switzer, Maureen Stapleton, Dana Boyko, Christine Panasian
9th Canadian Edition
1259271935, 9781259271939
