The affect of firm specific risk for which an investor would depart from indexed portfolio. Introduction: An investor may invest in various stocks to reduce the risk of losses. Such a theory is called correlation theory. It is believed that an investor takes a lot of risk to achieve higher returns on their investment portfolio.

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Chapter 8, Problem 3PS

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To discuss: The affect of firm specific risk for which an investor would depart from indexed portfolio.

Introduction: An investor may invest in various stocks to reduce the risk of losses. Such a theory is called correlation theory. It is believed that an investor takes a lot of risk to achieve higher returns on their investment portfolio.

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