The reason why some risk is diversifiable and some risk is not, and its implications on the investor’s control over the risk of the portfolio. Introduction: Risk refers to the movement or fluctuation in the value of an investment. The movement can be positive or negative. A positive fluctuation in the price benefits the investor. The investor will lose money if the price movement in negative. Diversification refers to the process of investing in multiple investment avenues.

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Chapter 13, Problem 1CRCT

Summary Introduction

To discuss: The reason why some risk is diversifiable and some risk is not, and its implications on the investor’s control over the risk of the portfolio.

Introduction:

Risk refers to the movement or fluctuation in the value of an investment. The movement can be positive or negative. A positive fluctuation in the price benefits the investor. The investor will lose money if the price movement in negative.

Diversification refers to the process of investing in multiple investment avenues.

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