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Efficient Diversification


AFTER STUDYING THIS CHAPTER YOU SHOULD BE ABLE TO:

  • Show how covariance and correlation affect the power of diversification to reduce portfolio risk.
  • Construct efficient portfolios.
  • Calculate the composition of the optimal risky portfolio.
  • Use factor models to analyze the risk characteristics of securities and portfolios.








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Essentials of Investments, 7eOnline Learning Center

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