An investor wishes to devise a portfolio consisting of a riskfree asset and a risky portfolio. As his proportion placed in the riskfree asset increases, the expected effects on the total portfolio's expected return and standard deviation would be to

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As the proportion in the risk-free asset increases, the expected return of the portfolio declines because the risk-free asset typically has a lower return than the risky portfolio. The standard deviation also declines because the risk-free asset has zero standard deviation, reducing the overall risk of the portfolio.

An Investor Wishes to Devise a Portfolio Consisting of a Riskfree