Bodie Marcus INVESTMENTS Fourth Edition Index model and diversification Rp=ap+Bpr ∑ ap=M∑a ∑ i=1 0 P=B poM+( P Irwvin/McGrazo-Hill 1012 The McGraw-Hill Companies, Inc, 1999Irwin/McGraw-Hill 10-12 © The McGraw-Hill Companies, Inc., 1999 INVESTMENTS Fourth Edition Bodie Kane Marcus Index Model and Diversification Index Model and Diversification ( ) 1 1 1 2 2 2 2 1 1 1 P M P P N i P i N i P i N i P i P P P M P e e N e N N R R e σ β σ σ α α β β α β = + = = = = + + ∑ ∑ ∑ = = =