Suppose that I have $100,000 to invest. I want to have an expected return of at least 5%. I want minimal little risk (volatility) as possible. My friend from UCLA recommends putting 100% in stock A. He explains that stock A even has a better Sharpe ratio, so he is confident this is the best thing to do. Explain briefly why he is wrong?

Answer rating: 100% (QA)

Your friends recommendation to put 100 of your 100000 investment in stock A even though it has a better Sharpe ratio may not be the best approach for ... View the full answer