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

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investme…