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Correlation and diversification

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A Three-part Short Essay Question: Please elaborate on this three part short essay question, which is based on our experiences from the trading simulation, Chapter 11, and other key resources I list below. Please cite your resources using the style of your preference, while composing a minimum of 2 paragraphs per question section. Please follow the grading rubric as a guide for answer this section of Short Essay questions(Can be found linked to the one of the latest announcements). It is highly suggested to employ at least one numerical or empirical example to assist in illustrating your answers to each section of question 6.Explain the differences between total risk, unsystematic risk, and systematic risk. Identify which risk is measured by standard deviation and which is measured by beta? Since we are on the subject of beta for both individual stocks and portfolio, what are the relationships among the reward-to-risk ratio, risk-free rate of return, market rate of return, market risk premium, beat and the security market line. Lastly if you could briefly explain how W. Sharpe's Capital Asset Pricing Model relates to Harry Markowitz's original and still Modern Portfolio Theory (MPT), including correlation and diversification.

Reference no: EM131340938

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