Composed of four securities and the other of ten securities

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Reference no: EM132007969

Consider two portfolios, one composed of four securities and the other of ten securities.

All the securities have a beta of 1 and idiosyncratic risk of 30%. Each portfolio distributes weight equally among its component securities. If the standard deviation of the market index is 20%, calculate the total risk of both portfolios.

Reference no: EM132007969

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