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Would you ever add a risky asset with a return below the risk free rate to a portfolio? A, Yes, if the risk is high
Would you ever add a risky asset with a return below the risk free rate to a portfolio?
A, Yes, if the risk is high enough it overcomes the low return.
B, No, investors seek return and dislike risk.
C, Yes, if it is negatively correlated with the portfolio.
D, No, it would lower the Sharpe ratio.
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