Marcus puts a greater proportion of his portfolio into government bonds. Marcus's action
A)increases both risk and the average rate of return.
B)decreases both risk and the average rate of return.
C)increases risk, but decreases the average rate of return.
D)decreases risk, but increases the average rate of return.

Question

Quizplus · Accepted Answer

Government bonds are generally considered low-risk investments, which typically offer lower average rates of return compared to riskier investments like stocks. Therefore, by increasing his investment in government bonds, Marcus decreases both the risk and the average rate of return of his portfolio.

Marcus Puts a Greater Proportion of His Portfolio into Government