Sources of risk and diversification – convertible bond. Address each source of risk from the portfolio perspective and how diversification impacts them.Portfolio Theory Risk

What is portfolio theory and why is it important to investing behavior?

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You are holding a portfolio of stocks where the beta of your portfolio is 2 and its correlation with “M” is1/2

The risk free rate is 5%, the expected market return 10%, and the standard deviation of the market return is 15%

How much risk reduction could you achieve, at no sacrifice in expected return, by making your portfolio an efficient one?

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