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What Is the Difference Between Unique Risk,which Can Be Diversified

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Essay

What is the difference between unique risk,which can be diversified away,and market risk,which cannot?


Definitions:

Risk-Free Rate

The expected yield on an investment that is considered completely risk-free, often linked to government securities.

Market Risk Premium

The additional return expected by investors for taking on the risk of investing in the stock market over a risk-free investment.

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