When wealth is shifted from the risky portfolio to the risk-free asset,what happens to the relative proportions of the various risky assets within the risky portfolio?
A) They all decrease.
B) Some increase and some decrease.
C) They all increase.
D) They are not changed.
E) The answer depends on the specific circumstances.

Question

Quizplus · Accepted Answer

The relative proportions of the various risky assets within the risky portfolio remain unchanged because the shift is between the risky portfolio as a whole and the risk-free asset, not within the risky portfolio itself.

When Wealth Is Shifted from the Risky Portfolio to the Risk-Free