You 've just decided upon your capital allocation for the next year, when you realize that you 've underestimated both the expected return and the standard deviation of your risky portfolio by 4 Will you increase, decrease, or leave unchanged your allocation to risk free T bills ...

Decrease Typically standard deviation exceeds return ...

You've just decided upon your capital allocation for the next year, when you realize that you've underestimated

Question:

You've just decided upon your capital allocation for the next year, when you realize that you've underestimated both the and the standard deviation of your risky by 4%. Will you increase, decrease, or leave unchanged your allocation to risk-free T-bills?
Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...