Marcus puts a greater proportion of his portfolio into government bonds.This
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

Question

Quizplus · Accepted Answer

Government bonds are generally considered low-risk investments, so increasing their proportion in a portfolio decreases overall risk. However, they also typically offer lower returns compared to stocks or other higher-risk investments, thus decreasing the average rate of return.

Marcus Puts a Greater Proportion of His Portfolio into Government