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Why systematic risk is the relevant risk of an investment

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Reference no: EM132785572

a) Suppose that you are a risk averse investor but that you still invest in shares. Will the betas of the shares in which you invest be more or less than 1.0? Will you invest in shares that are positively correlated? Explain your answer in detail.

b) Explain why systematic risk is the relevant risk of an investment and why investors should be rewarded only for this type of risk.

Reference no: EM132785572

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