Assume you own a portfolio that is invested 50 percent in large-company stocks and 50 percent in corporate bonds. If you want to increase the potential annual return on this portfolio, you could:
A)decrease the investment in stocks and increase the investment in bonds.
B)replace the corporate bonds with intermediate-term government bonds.
C)replace the corporate bonds with Treasury bills.
D)increase the standard deviation of the portfolio.
E)reduce the expected volatility of the portfolio.

Question

Quizplus · Accepted Answer

Increasing the standard deviation of a portfolio generally means taking on more risk, which is associated with the potential for higher returns. Options A, B, C, and E typically involve moving towards investments with lower risk and potentially lower returns compared to large-company stocks.

Assume You Own a Portfolio That Is Invested 50 Percent