What is diversifiable risk what is the role of, Ask an Expert

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What is diversifiable risk? What is the role of diversification in the capital asset pricing model? If investors are risk averse, which would they prefer:

a stock with an expected return of 5% with a beta of 1.2 or a stock with an expected return of 6% with a beta of 1.3? Explain.

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Basic Finance, Finance

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