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(a)Explain the principle of portfolio diversification and its relevance to the capital asset pricing model. (b)Using the capital asset pricing model, carry out calculations to
(a)Explain the principle of portfolio diversification and its relevance to the capital asset pricing model.
(b)Using the capital asset pricing model, carry out calculations to show which of the two portfolios has performed better, and which should be liquidated, and comment on the validity of your conclusions.
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