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financial management 534 from the book corporate finance: the core 2010 custom edition. diversification in stock portfolios. Considering the following two, completely serparate economies. The expected return and volatility of all stocks in both economies is the same. In the first economy, all stocks move together in good times al prices rise together and in bad times they all fall together. in the second economy stock returns are independent one stock increasing in price has no effect on the prices of other stocks. Assuming you are risk averse and you could choose one of the two economies in which to invest, which one would you choose? Explain. i need two stock markets they can be made up for portfolio. (1.) 5 stocks and (2.) 15 with probability of 100%? im soo lost on this one, he advise that we make up the numbers and those are the numbers i made up, but this is the question from the text book.
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