You Currently Have a Portfolio Comprised of 70 Percent Stocks

question 45

Multiple Choice

You currently have a portfolio comprised of 70 percent stocks and 30 percent bonds.Which one of the following must be true if you change the asset allocation?

• A) The expected return will remain constant.
• B) The revised portfolio will be perfectly negatively correlated with the initial portfolio.
• C) The two portfolios could have significantly different standard deviations.
• D) The portfolio variance will be unaffected.
• E) The portfolio variance will most likely decrease in value.

---

Definitions:

Money Supply

The complete value of all money resources in an economy during a particular time frame.

Checking Account

A bank account that allows easy access to funds, typically through checks and electronic debits, for everyday transactions.

Newly Received Loan

Funds borrowed for the first time, typically involving an agreement on repayment terms and interest rates.

Fed

The Federal Reserve System, the central banking system of the United States, which regulates banks, manages the country's money supply, and aims to ensure economic stability.