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We discussed that on average investors are risk averse. They require a compensation from taking risk. We also know that that a stock's total risk
We discussed that on average investors are risk averse. They require a compensation from taking risk. We also know that that a stock's total risk can be decomposed into two parts: systematic risk and idiosyncratic risk. Which type of risk do you think should be compensated?
Total risk
Only systematic risk
Only idiosyncratic risk
Depends on investors' degree of risk aversion
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