Assuming you are the CFO of a struggling company with limited free cash flow, your team suggests creating a new product line that will generate sufficient funds for the business. The problem is that the product is still three years away from being able to be sold to the public, and you will run out of cash within the next several months.

Using basic concepts such as CAPM model, risk-return trade-off, portfolio theory, and WACC , discuss how you can balance your risk and return through portfolio diversification