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Which of the following statements is CORRECT? 1) Firm-specific risk cannot be diversified away. Therefore, investors require more compensation to bear such risks. 2) Systematic
Which of the following statements is CORRECT?
1) Firm-specific risk cannot be diversified away. Therefore, investors require more compensation to bear such risks.
2) Systematic risk is stock specific. Therefore, it can be eliminated by building a portfolio of diversified stocks.
3) Systematic risk can be measured by regressing a stock's returns against the returns of the Market Portfolio.
4) Total Risk equals Beta and Standard Deviation
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