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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
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
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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
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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