Question

You have a portfolio that consists of equal amounts of IBM stock and Treasury bills. If you replace one-third of Treasury bills with more IBM stock , the expected portfolio return will ______, ceteris paribus.

Answer 1

Answer: increase

Explanation:

You have a portfolio that consists of equal amounts of IBM stock and Treasury bills. If you replace one-third of Treasury bills with more IBM stock , the expected portfolio return will increase, ceteris paribus

The expected return for a particular investment are the returns which a an investor expects when he or she invests in a particular investment. In the above scenario, there'll be an increase in the expected portfolio return.