You have recently won €5million on the lotto. You decide to invest €4million of your winnings in the stock market. You are a huge Manchester United fan and are really tempted to invest the entire €4million in shares of Manchester United Plc. However,

1. having recently spent a number of weeks in your finance class learning about risk and expected return you know that this is not a wise investment strategy. 
2. 
   
3. Explain in detail why this is the case. 
4. 
   
5. What can you do in order to improve the risk/return profile of your portfolio? Use a diagram to support your answer

Answer rating: 100% (QA)

Investing the entire 4 million in shares of Manchester United Plc would not be a wise investment strategy due to the lack of diversification Diversifi... View the full answer