Just by looking at the figure below, which portfolio should you add to your already well diversified portfolio? E(r) В a. Only Portfolio Y, because ay is positive and portfolio Y has lower systematic risk than portfolio X O b. Only Portfolio X, because ax is positive and higher than ay Oc. Both X and Y, because both have positive alphas Od. Indifferent between X and Y, because both give same expected return per unit of 8
Just by looking at the figure below, which portfolio should you add to your already well diversified portfolio? E(r) В a. Only Portfolio Y, because ay is positive and portfolio Y has lower systematic risk than portfolio X O b. Only Portfolio X, because ax is positive and higher than ay Oc. Both X and Y, because both have positive alphas Od. Indifferent between X and Y, because both give same expected return per unit of 8
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Just by looking at the figure below, which portfolio should you add to your already well diversified portfolio?
E(r)
B
a. Only Portfolio Y, because ay is positive and portfolio Y has lower systematic risk than portfolio X
O b. Only Portfolio X, because ax is positive and higher than ay
Oc. Both X and Y, because both have positive alphas
Od. Indifferent between X and Y, because both give same expected return per unit of 8](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad43ca8a-ab45-4acf-82d3-3ba691d16e03%2Fbaba11bb-de95-46af-9b6e-0c1b1a0945ca%2F277mybg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Just by looking at the figure below, which portfolio should you add to your already well diversified portfolio?
E(r)
B
a. Only Portfolio Y, because ay is positive and portfolio Y has lower systematic risk than portfolio X
O b. Only Portfolio X, because ax is positive and higher than ay
Oc. Both X and Y, because both have positive alphas
Od. Indifferent between X and Y, because both give same expected return per unit of 8
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