Assume You Own a Portfolio That Is Invested 50 Percent

question 84

Multiple Choice

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.

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Definitions:

Insolvent

Refers to a financial state where an entity cannot meet its debt obligations as they come due.

Obligations

A legal or financial duty that an entity is required to fulfill, such as debt repayment or service delivery.

Liabilities With Priority

Obligations of a business that are given precedence over other debts, especially in the context of bankruptcy or liquidation proceedings.