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Which of the following statements is CORRECT? 1.) Total Risk equals Beta and Standard Deviation 2.) Firm-specific risk cannot be diversified away. Therefore, investors require

Which of the following statements is CORRECT?

1.) Total Risk equals Beta and Standard Deviation

2.) Firm-specific risk cannot be diversified away. Therefore, investors require more compensation to bear such risks.

3.) Systematic risk can be measured by regressing a stock's returns against the returns of the Market Portfolio.

4.) Systematic risk is stock specific. Therefore, it can be eliminated by building a portfolio of diversified stocks.

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