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:

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production, such as labor.

Productivity

Productivity measures the efficiency of production in terms of the amount of goods and services produced from a given amount of inputs, such as labor and capital, within a specific period.

Derived Demand

Derived demand refers to the demand for a good or service that originates from the demand for another good or service.

Final Demand

The demand for finished goods and services by consumers, businesses, and government, excluding intermediate goods.