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Edward is considering investing in a portfolio of three stocks. He plans to invest $25,000 in Stock A, $25,000 in stock B, and $50,000 in

Edward is considering investing in a portfolio of three stocks. He plans to invest $25,000 in Stock A, $25,000 in stock B, and $50,000 in stock C.

Stock A has a beta of 0.8 and a standard deviation of 10%.

Stock B has a beta of 1 and a standard deviation of 15%.

Stock C has a beta of 1.4 and a standard deviation of 12%.

a. Briefly explain the difference between systematic and unsystematic risk and identify which of the stocks carries more systematic risk and why.

b. Based on Edward's investment plan, calculate the beta of his portfolio. Briefly show your calculations. Round to two decimal places.

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