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(5 marks) (a) An investor divides her portfolio into thirds, with one part (one third) in Treasury bills, one part in a market index, and
(5 marks) (a) An investor divides her portfolio into thirds, with one part (one third) in Treasury bills, one part in a market index, and one part in a diversified portfolio with beta of 1.50. What is the beta of the investors overall portfolio?
(b) (5 marks) What are two types of risk that an investor is exposed to when she is investing in common stocks. What is the difference between these two types of risk?
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