Bodie Marcus INVESTMENTS Fourth Edition Risk reduction with diversification variance Unique risk ep=oe)/n P 22 Market risk Number of Securities Irwvin/McGrazo-Hill 10-13 The McGraw-Hill Companies, Inc, 1999Irwin/McGraw-Hill 10-13 © The McGraw-Hill Companies, Inc., 1999 INVESTMENTS Fourth Edition Bodie Kane Marcus Risk Reduction with Diversification Risk Reduction with Diversification Number of Securities variance Market Risk Unique Risk σ2(eP)=σ2(e) / n βP2σM2