Marcus Puts a Greater Proportion of His Portfolio into Government

question 56

Multiple Choice

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.

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Definitions:

Dissolution

The process of legally dissolving or ending an entity, such as a corporation or partnership.

Debenture

A type of debt instrument that is not secured by physical assets or collateral but is backed by the general creditworthiness and reputation of the issuer.

Creditor/Debtor

A relationship where one party (the creditor) lends money or extends credit, and the other party (the debtor) owes the money.

Articles of Incorporation

Legal documents filed with a governmental body to legally document the creation of a corporation.