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Suppose an investor has a two asset portfolio comprised of Stock A and Stock B. The diversification effect is attributable to which component of the

Suppose an investor has a two asset portfolio comprised of Stock A and Stock B. The diversification effect is attributable to which component of the variance equation?

a.

Beta
b.

Var(B)*Wb^2
c.

2*Wa*Wb*Cov(A,B)
d.

Var(A)*Wa^2

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