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By holding a portfolio of more than 20 stocks, this portfolio can have: Higher expected return than the stock with the highest expected return in
By holding a portfolio of more than 20 stocks, this portfolio can have: Higher expected return than the stock with the highest expected return in this portfolic Higher specific risk than the stock with the highest specific risk in this portfolio Lower systematic risk than the stock with the lowest beta in this portfolio Lower total risk than the stock with the lowest standard deviation in this portfolio A stock is expected to return 8% in a normal economy, 15% if the economy booms, and lose 6% if the economy moves into a recessionary period. Economists predict a 65% chance of a normal economy, a 14% chance of a boom, and a 21% chance of a recession. The expected return on the stock is 1
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