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Why do most investors hold diversified portfolios

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Reference no: EM132819726

Problem 1: Why do most investors hold diversified portfolios?

Problem 2: What is covariance, and why is it important in portfolio theory?

Problem 3: Why do most assets of the same type show positive covariances of returns with each other? Would you expect positive covariances of returns between different types of assets such as returns on Treasury bills, General Electric common stock, and commercial real estate? Why or why not?

Reference no: EM132819726

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