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Suppose you're a financial adviser who has been asked by a client to explain how diversification works. The client wants to know the following information:
Suppose you're a financial adviser who has been asked by a client to explain how diversification works. The client wants to know the following information:
-Does diversification risk exist?
-If nondiversifiable risks exists, what is it?
-How do you determine total risk?
In your answer, also explain how diversification relates to systematic and non-systematic risk, and explain how the expected return on an asset is related to these concepts.
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