1 Investor Choice, Market Securities and Portfolio Theory Examination Alex A. A. Bruce 1 Department of Business Administration, Gombe State University, Nigeria. Key Words : Choice Theory, Portfolio Diversification, Capital Market Securities, Stock Exchange and Informed Investor Reference this Paper as: 1 st Int’l Conference Proceedings on “Global Economic Outlook and Challenges to Developing Economies” 29-30 th November, 2012; 255-259, Sri Lankan Forum of University Economists. Introduction The Capital Market Securities investment has grown to be the most popular investment opportunity world-wide. The market often has opened the floor for interaction between the issuers and buyers of securities. Choices could be made available for informed investors to invest in various investment options which could be debt securities such as bonds/debentures and derivatives; ownership securities (equity) such as common stocks; and/or debt-equity security such as preferred stocks. Observations on the Nigerian Stock Exchange (NSE) and the Colombo Stock Exchange (CSE) over the years have shown that equity shares and debt securities are the most prominent; which means that the actual practice on the real market seems divergent from the theoretical perspective where preferred stocks are considered as a bridging security between the equity stocks and the debt securities. This therefore induce the study to examine portfolio diversification in the light of the available securities listed and traded on the NSE and the CSE to determine whether the informed investor’s ability to diversify his investment choices could assist him to achieve an efficient and equitable portfolio. Although an efficient portfolio according to Markowitz (1952) is that bundle of assets and securities that dominates others of its kind based on minimum risk or maximum expected returns. However, in this paper, we intend to postulate that, making all required capital market securities available will be a better way to assess their viability to know whether a given security dominates the other based on minimum risk or maximum returns; otherwise the investor is only left with what he/she sees available, ceteris paribus. 1 Currently affiliated to the Department of Accountancy, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka.