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How does one asset in the same portfolio influence the other one in the same portfolio?
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Solved in 2 steps
- How does the creation of a portfolio reduce risk? What type of assets should be included in a diverse portfolio? Why should they be included?What is the relationship between the efficient portfolio and the feasible portfolio?How do an investment's required rate of return vary with perceived risk? Explain with an example?
- What are the quantitative characteristics of the asset and how to measure. How does one asset in the same portfolio influence the other one in the same portfolio. What could be the influence of this relationship to the investor's portfolio? What is relationship between the return on an asset and returns in the whole market (market portfolio)?What does “investment risk” mean?What is the importance of correlation in relation to creation of a portfolio.