You are concerned about one of the assets in your fully diversified portfolio. You just have an uneasy feeling about the CFO, Ian Malcolm, of that particular firm. You do believe, however, that the firm makes a good product and that it is appropriately priced by the market. Should you be concerned about the effect on your portfolio if Malcolm embezzles a portion of the firms cash? Discuss in light of your readings on diversification of assets in a portfolio.

Further, assume your friend Jane is trying to decide to purchase stock from that same company. Jane doesnt hold a diversified portfolio like you do. Based on the relationship between risk and return, will you be willing to pay a higher price for the stock than Jane? Explain.