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Rewarded for systematic or unsystematic risk

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Reference no: EM133204695

Provide a brief answer of one to three sentences to the following questions:

a. Portfolio A contains stocks A and B. Stock A and B are perfectly positively correlated. Portfolio B contains stocks D and E. Stocks Dand E are perfectly negatively correlated. If you were a risk adverse investor, which portfolio would you prefer to own and why?

b. Does an investor holding a portfolio of stocks expect to be rewarded for systematic or unsystematic risk? Briefly explain why and the difference between systematic and unsystematic risk.

Reference no: EM133204695

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