Consider the two completely separate economies

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Consider the following two completely separate, economies. The expected return as well as volatility of all stocks in both economies is the same. In the first economy altogether stocks move together-in good times all prices increase together and in bad times they all fall together. In the second economy, stock returns are independent-one stock increasing in price has no effect on the prices of other stocks. Presuming you are risk-adverse and you could choose one of the two economies in which to invest which one would you choose? Explain

Reference no: EM13109345

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