Consider the theory of active portfolio management. Shares A and B have the same beta and non-systematic risk. Share A has higher positive alpha than share B. You should want ________ in your active portfolio.
A)equal proportions of shares A and B
B)more of Share A than Share B
C)more of Share B than Share A
D)more information is needed to answer this question

Question

Quizplus · Accepted Answer

Active portfolio management aims to beat the market by selecting securities with more favorable returns than the market. Share A has a higher positive alpha, i.e., it has outperformed the expected return based on its risk level. Therefore, it is preferable to hold more of Share A in the portfolio compared to Share B.

Consider the Theory of Active Portfolio Management