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Starting with the model of Equation (1.2), derive the risk model shown by Equation (1.6). 4. Starting with the model of Equation (1.2), derive the

Starting with the model of Equation (1.2), derive the risk model shown by Equation (1.6).

4. Starting with the model of Equation (1.2), derive the risk model shown by Equation (1.6). Rt = a + B . RMRF+ + et, (1.2) V [Rt] = B2 . V [RMRF ] + V [et] Systematic Risk Idiosyncratic (stock- or portfolio-specific) risk (1.6)

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