Can he properly ignore diversifiable risk

Reference no: EM131243745

1. Why is it reasonable to ignore diversifiable risk and care only about nondiversifiable risk? What about an investor who puts all of his money into only a single risky stock? Can he properly ignore diversifiable risk?

2. If we compare the betas of various investment opportunities, why do the assets that have higher betas also have higher average expected rates of return?

Reference no: EM131243745

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