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Consider the case of a two-security universe. a. How do we determine the return and risk of a portfolio that can be formed using two
Consider the case of a two-security universe.
a. How do we determine the return and risk of a portfolio that can be formed using two securities? State the relevant equations and briefly explain their implications.
b. What statistical measure in portfolio risk computation (as in part a) captures the process of risk reduction when forming portfolios? Explain.
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