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Question 5 1 pts Which of the following statement is incorrect? The return that well-diversified investors demand when they buy a security, as measured by
Question 5 1 pts Which of the following statement is incorrect? The return that well-diversified investors demand when they buy a security, as measured by the CAPM and beta, relates to the degree of nondiversifiable risk in the security The diversification effect results in risk reduction because we are combining two assets that have returns that are negatively correlated (r=-1.0). The CAPM is used to determine the appropriate coefficient of variation for projects of different degrees of risk. The market risk premium, (km-RFR), indicates the premium investors require over the risk-free rate to invest in the general market index. Most of the answers are correct
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