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Diversification
Diversification is an investment strategy that involves spreading investments across various financial instruments, industries, or other categories to reduce risk.
Risk Premium
The extra return above the risk-free rate that investors demand as compensation for the risk of an investment.
Systematic Risk
The risk inherent to the entire market or market segment, unavoidable through diversification.
Security Market Line
A line that represents the relationship between the risk of an investment and its expected return, based on the capital asset pricing model (CAPM).
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