Question $2$: Suppose we have done mean$-$variance analysis and drawn the investment opportunity set. What happens to the Sharpe ratio of the tangency portfolio if we now introduce one more risky asset?

A$.$ It increases

B$.$ It stays the same

C$.$ It decreases substantially if the new asset is highly correlated with one of the old assets

D$.$ It becomes to equal to the expected return of the minimum variance portfolio

E$.$ It stays the same or increases. The outcome depends on the asset's expected return and its correlation with existing assets.