The figure shows the risk of a portfolio consisting of n stocks. Which choice is...
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The figure shows the risk of a portfolio consisting of n stocks. Which choice is false? The idiosyncratic component of the portfolio risk is on average almost 20%. As we increase n, the share of firm-specific risk goes down. The diversifiable risk of the portfolio declines as we increase n. The systematic risk cannot be diversified away by adding more stocks to the portfolio
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