Most finance textbooks say that investors should diversify, Ask an Expert

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Most finance textbooks say that investors should diversify because they will not be compensated for diversifiable risk. This may wrongly imply that the market has a formal (automatic) reward system for risk.

a. How do investors “demand” to be compensated for risk?

b. Why aren’t investors compensated for diversifiable (unsystematic) risk?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92320510

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